The Treasury Is Expanding the Patriot Act to Attack Bitcoin Self Custody

> [The Patriot Act] contains many sunset provisions beginning December 31, 2005, approximately four years after its passage. Before the sunset date, an extension was passed for four years which kept most of the law intact. In May 2011, President Barack Obama signed the PATRIOT Sunset Extensions Act of 2011, which extended three provisions. These provisions were modified and extended until 2019 by the USA Freedom Act, passed in 2015. In 2020, efforts to extend the provisions were not passed by the House of Representatives, and as such, the law has expired.

Source: https://en.wikipedia.org/wiki/Patriot_Act

A few years ago, I tried to open a bank account, and was turned away because my visa stamp expired (despite having valid immigration status). The clueless clerk and her advisor were going through The Patriot Act to find justification.

Fortunately, other banks weren't staffed with idiots, and I was able to open an account elsewhere after providing my documents.

I think the case for why strong encryption is important is much clearer than why untraceable financial instruments are important and I don't think it's super compelling to argue that these things are actually the same, even if your opposition to government control is the same.

I think it's actually pretty clear that almost all people are not capable of secure and reliable self-custody and would be better off with an intermediary. We're not keeping our fiat currency in a safe under our bed after all.

I have a grad school professor that owes me $1M dollars on a bet that the Patriot Act would never end. I told him he was painfully naive and not suitable to each graduate school economics with such thinking.

War on Terror AUMF is still in force and is why the President can just decide to bomb whatever country they want without asking for permission, now.

All that shit after 9/11 was crazy and dangerous, and some of us said that at the time, and go figure, the fucking obviously true things we were saying have turned out to be... true. What a surprise.

And it happens exactly as predicted. Surprise!

> concentrating power in a few regulated intermediaries. That’s not healthy for innovation, or democracy.

How are "regulated intermediaries" not democratic? If they're regulated by the democratically elected government, that seems entirely democratic to me.

If only there were some sort of loud opposition to this act, predicting exactly the situation we're in today. Our elected representatives would have had to take a hard look at this and reject it due to its danger!

The draft text explicitly bans single-use addresses, which are used by any self-respecting wallet (Exodus, Ledger, Trezor) these days.

The actual problem with the article/headline is that the "Patriot Act" has expired. Although I'm sure there are plenty of similarly vague laws that could be used to justify this.

If you've got nothing to hide, you have nothing to worry about! Nobody will ever run afoul of the system or fall through the cracks. We only have the best and brightest bureaucrats who won't make mistakes. Nobody will ever be attacked with this for politicized reasons. This will never be used to debank or isolate or penalize or attack an innocent person. And even if it did, the government would never use its immunity from prosecution to evade accountability!

Don't be paranoid, and don't worry! We're the good guys!

That is an attack on self-custody. If you hold Bitcoin you now have an elevated risk of being picked up in some dragnet and suffering random consequences in unrelated parts of the financial system for reasons that you don't understand. If Bitcoin holders weren't alerted by articles like this, there is actually a pretty reasonable chance that they go in, experiment with Bitcoin and trip off a surveillance system as being "suspicious".

It is unlikely that we know what the penalties for suspicious transactions are in the US legal system. That seems like a matter that should have come before FISA Court at some point so we won't see public records of what the case law is. Even if it hasn't the actual workings of the financial control the US exercises aren't exactly secret but they also aren't exactly easy to follow.

> The author makes the imaginary leap because they say they personally recommend doing all those things with self-custody.

It is because if you can't do those things, bitcoin has no use. Its only functions are to dodge laws and transfer money, and it's bad at transferring money.

That assumes Bitcoin maximalists ultimately see it as a means of transaction. The ones I come across in the wild are purely maximalists for speculative purposes and couldn’t care less about the “practical” use cases for it.

Yeah. I understand the excitement over the past two decades about the possibility of cryptocurrencies, but it came with a lot of naivete. After the fight to create sovereign central banks, did anyone seriously think that they were just going to give it up? Sure, maybe they can't stop you technologically, but it's very easy to simply make it unlawful, and then the men (and robots) with guns call.

But with Monero, you see that it is effectively shut off from the Fiat ecosystem entirely. The proposal here clearly lays out how bad Bitcoin is for privacy. But it's not like the more private alternatives are actually allowed to be viable alternatives.

Very true. In my opinion, and strictly from an American-centric view, privacy should only extend to transactions within borders between citizens. As soon as it involves transactions from outside our borders, then it is a national security concern. We know, right now, that both Russia and China are fueling internal political tension via massive and sophisticated disinformation/influence campaigns, a certain part of which involves paying influencers, extremists, shady media outlets, maybe a Representative or three in America to push their agendas, foment discontent aiming to destabilize and control the United States. Monero is definitely being used in this information warfare. I am pro-privacy, pro- individual rights, but we have to resolve this central tension of these things and the very real hyper connected world we live in which very real nation-state enemies. I am at the point where I think restricting the internet to allied countries might actually be a good idea, as currently we are leaving citizens unprotected from every nation-state actor who wishes to manipulate us with targeted, data-analytic, bot- and ai-empowered campaign against us. It is out of control, and as long as a monetary instrument like crypto enables that attack surface, it will be hard for me to support crypto-maxamialism.

If Monero ever came close to Bitcoin's popularity, it would be outlawed. Plain as that. You can't get freedom through technology.

>If you want privacy on Bitcoin

its like html being using for full blown applications.... its the wrong application of the tech. If you dont want people to see where you send stuff why would you pick a technology designed to do that?

> There's a conflict between Bitcoin as a public ledger, privacy, and money laundering

There is, to be fair, a legitimate debate to be had about dismantling our anti-money laundering infrastructure.

Essentially decentralisation sounds nice, but doesnt work in practice.

> The fact is that privacy, especially of financial transactions, is becoming illegal. Any technology that allows you to send or spend money anonymously will be attacked by our governments. They won't be allowed.

It's probably a bit worse than that. It's not specific to transactions or spending.

Eventually any IP talking to another IP without the mandatory metadata to link it to a physical identity will be illegal.

Right now there is a hodge-podge of solutions that piggy-back on the phone networks, wires, etc. that used to give LEO enough actionable information to track some criminals. But most of that has been obsoleted by modern cryptography.

Spot on.

Some think we need financial freedom, but in reality it's the freedom to fund scams and malware, launder money, dodge taxes, and buy stuff that’s illegal.

That won't become legal just because you use "Monero" or whatever. Obviously we can't have privacy for financial transactions.

It can be hard to figure out exactly what is outlawed with banking interactions. It seems a lot of the KYC/AML stuff is based on industry best practices and guidelines. There's no law you need a state ID with address to open a bank account, but when I tried to open up a bank account without an address I found it basically impossible. The bank will then cite that these practices are what they're held to as law, because the law itself is vague and relies on more nebulous customs.

So what is called "guidelines" one day becomes legally binding later with no act of congress.

Unfortunately there's a massive swath of mere guidelines and regulation that end up having legal binding. For instance, a Navy sailor was recently sent to jail for 20 years for having gun parts that were cut up the wrong way, the "wrong way" being the right way with previous mere guidance and the wrong way apparently being the fact that some time since then the guidance changed but not the law.

> creating and using single-use wallets, addresses, or accounts, and sending [cryptocurrency] through such wallets, addresses, or accounts through a series of independent transactions

One could argue that's how normal Bitcoin wallets work. The addresses are deterministic based on your passphrase (or derived private key). The addresses don't need to get reused because there's no real value in doing so, and no real cost of just using a new address each time.

Though yes--even if that's the exact meaning and design, presumably one could still use the simpler wallets that DO just reuse the same address over and over. And obviously that'd reduce privacy quite a bit.

Because just about all those practices are what reasonable users of the protocol would do, and making your transactions 'suspicious' is synonymous with all the big players refusing to deal with you. It's a way of prohibiting behaviour outside the force of law, which is even more insidious.

Strictly speaking, loading an address with many UTXOs has no effect on security of the receiving address at all (beyond increasing its public profile).

The security concerns start happening after an address spends a UTXO. Before a P2WPKH (segwit) address is used, only the public key hash is known. In order to spend from it, the full public key needs to be revealed. That's why it's recommended to use single-use addresses, because a quantum computing attack or elliptic curve vulnerability could be used against an address where the attacker knows the public key, but would not work against an address where the pubkey has not yet been revealed.

So, the main security change happens after you spend from an address the first time. Subsequently, there are theoretical vulnerabilities that could occur after an address is spent from many times, but really only if the signer is malicious like dark skippy, or faulty and doesn't properly follow RFC 6979 deterministic signatures, leaking some signature entropy which could be used to crack the private key. The latter has happened with some bad custom wallet implementations, but these attacks are even further in the realm of theoretical, not super realistic, require faulty software/firmware to be implanted into signing devices.

On the other hand you get to vote who is in the gang. So choose wisely.

I recognized it in the opposite direction, after observing that gangs inevitably end up being quasi-states within their turf. They demonstrate almost everything I associate with statehood except for issuing their own currency. From there, the reverse (that governments are just big gangs) also flows naturally.