Is the crypto industry in the US under threat from lawmakers?

Getting your Trinity Audio player ready...

U.S. Senator Lindsey Graham is not too fond of cryptocurrencies. At the heart of the concern is the subject of encryption, which he feels is an enemy of the state. Encryption, when in the wrong hands, can certainly be used for nefarious deeds – a statement that can be made about virtually anything with normally innocuous purposes. However, a new measure being considered by federal lawmakers could possibly threaten the very survival of crypto in the country, as well as bring a halt to all forms of social messaging platforms in their current forms. Imagine a world without WhatsApp, Telegram and others – and without digital currency.

A draft bill is making its rounds that would force companies to provide government access to their platforms, breaking the end-to-end encryption that many offer. The Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act is designed to help tighten the screws on things like child porn and slavery; however, it forces all companies to give law enforcement agencies access to communications on the networks without hindrance.

Tech Freedom’s Berin Szoka explains, “Signal, Telegram, and WhatsApp all could no longer exist in their current form. All would be required to build in backdoors for law enforcement because all could be accused of ‘recklessly’ designing their products to make it impossible for the operators or law enforcement to stop CSAM sharing. The same could happen for age verification mechanisms. It’s the worst kind of indirect regulation. And because of the crazy way it’s done, it could be hard to challenge in court.”

If the companies don’t comply, they can be branded terrorists or terrorism supporters. Graham has already determined that crypto malware is an act of terrorism and wants to hold companies that he believes could otherwise prevent the activity (i.e., allowing terrorist communications on the platform) to be held accountable. He explained a few years ago, in defending his branding of malware as an act of terrorism, “We have a state-sponsor of terrorism list that the State Department collects. If you are on that list, bad things come your way because you are a bad actor. If we don’t wake up some of the nation-states where these problems reside in large measure, you are never going to fix this problem.”

No one should be naïve enough to believe that the government would limit its new powers to only possible child porn or child exploitation. If encryption becomes a thing of the government’s ire and is banned, it will definitely make it easy for the government to keep tabs on virtually all crypto transactions. Szoka adds, “The Graham bill would create broad new legal risks by lowering the (actual) knowledge requirement from ‘knowingly’ to ‘recklessly’ (which would include an after-the-fact assessment of what the company ‘should have known’) and amending Section 230 to authorize both criminal prosecution and civil suits under state law. For the first time, operators could be sued by plaintiff’s lawyers in class-action suits for ‘reckless’ decisions in designing or operating their sites/service.”

When word started circulating about the EARN IT Act, Fundstrat’s Thomas Lee took a look and shared his view on Twitter, stating, “If true, would have some negative impact on crypto and digital assets which are grounded by cryptography.”

If true, would have some negative impact on crypto and digital assets which are grounded by cryptography https://t.co/Rze94Oo916

— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) February 5, 2020

Graham, the chair of the Senate Judiciary Committee, hinted last December that something like this was coming. He told tech representatives during a hearing on security, “You’re going to find a way to do this or we’re going to do this for you.” It looks like he’s determined to get his way.