Massive Examination by Coin Center Attorney Released, Suggesting the BSA is Unconstitutional
Since the United States was established with its own government, the law has been primarily governed by the Constitution. Every part of the original document, including the Bill of Rights and the division of the government’s branches, are meant to ensure that power can be limited.
The first ten amendments have seen many interpretations in the two centuries since the Constitution was implemented, ensuring that courts can settle various controversies efficiently. One of the key amendments to recently come up is the fourth amendment, which restricts the government’s ability to search and seize property or individuals.
In a study from Van Valkenburgh, titled “Electronic Cash, Decentralized Exchange, and the Constitution,” the researcher examines the Bank Secrecy Act, current laws, and how they coincide with the forth and first amendments. Specifically, he examines these factors in relation to cryptocurrencies, primarily involving peer-to-peer digital cash.
Valkenburgh comments that the regulation of the individuals that use or create the cryptocurrency software under the Bank Secrecy Act is unconstitutional. Citing the fourth amendment, he alleges that the regulation of this software would be considered a “warrantless search and seizure of information private to cryptocurrency users.”
Considering that the first amendment centers on the protection of free speech, the regulations that impede the licensing or use of crypto software would also be unconstitutional.
This report spans over 70 pages, examining the ways that modern cryptocurrency fits into the 200-year old constitutional rights and authorities. The BSA is challenged by the lack of authority placed over this anonymous digital cash industry and its exchanges, considering that there has been nothing even imagined that could be compared to cryptocurrency in the last 50 years. Based on the findings of Valkenburgh, the BSA has not really been tested on its constitutionality.
The argument that Valkenburgh brings to the table is based on the Third Party Doctrine, which shows that the BSA is exempt from the requirement of a warrant, if using a regulator or law enforcement for data collection. Any financial institution needs to follow this doctrine to operate in the Unites States, but cryptocurrencies are different.
Considering decentralized exchanges and Bitcoin Cash, neither actually rely on financial institutions to perform the transactions, which means that they don’t have to abide by the BSA laws that rule the banks.
The free speech protection that the first amendment offers could actually keep a barrier between software developers and the enforcement of the BSA, though the lack of financial institution could put them in the sights of regulators. Valkenburgh adds that case-law could end up being developed to protect cryptocurrencies, which will require some advocates for the industry to pursue it.