Robert Novy, Deputy Assistant Director to the Office of Investigations of the United States Secret Service, published a prepared testimony to the US House of Representatives on Wednesday that marked one of the first times that privacy coins have been brought to the government’s attention.
“It is critical that the United States continues to work internationally to improve controls related to digital currency through organizations like the Financial Action Task Force. We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e., cryptocurrency tumblers or mixers) and cryptocurrency mining pools,” he said.
He also alleges that ISPs are “taking actions that impede timely access to digital evidence,” which may spell trouble to internet privacy for citizens if his words are taken seriously. This sounds a bit like another attempt to push for ISPs to monitor their users so that they can pinpoint exactly who did what on the internet.
If, at the provider level, a transaction on a privacy coin is recorded, the government could theoretically know what address the transaction took place at and associate the individual at the address with that transaction.
“The recently enacted CLOUD Act was an important step in this regard, but further legislative or regulatory may be needed, as case law and business practices continue to develop,” Novy added.
The CLOUD Act is legislation that enabled the United States government to competently perform surveillance on cloud networks, given their technological differences to traditional databases.
Perhaps what Novy is suggesting here is for the US government to begin the process of looking into blockchain surveillance.
Privacy coins have recently gotten somewhat of a bad reputation because of their association with cyber criminals who launder stolen cryptocurrencies through them. This is exactly what led to Coincheck—a Japanese exchange that suffered one of the worst breaches in history—to delist Monero and Zcash.
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