Is the Bank Secrecy Act unconstitutional?
Is the Bank Secrecy Act unconstitutional?
Today we published a major new paper by Peter Van Valkenburgh making the case that the Bank Secrecy Act is likely unconstitutional. It is either (A) so broad as to criminalize everyday life, (B) so ambiguous as to make uncertain its application to millions of Americans, or (C) spared from being so broad or so ambiguous by the exercise of legislative authority delegated by Congress to the Treasury Department. You can read a summary of the paper here.
Our director of research Peter Van Valkenburgh was interviewed by CoinDesk about this issue. Read the full transcript here.
Our suit against the Treasury Department over OFAC’s sanctions designation of Tornado Cash smart contracts was dismissed by the district court. We believe the court incorrectly applied the statute, which requires a party to have “any interest … in property.” In our case, the court appears to argue that “any interest” at all is sufficient. Therefore, we will be filing an appeal to the Eleventh Circuit Court of Appeals.
This is a disappointing result, but we always knew we would end up in appeals. If we had won, the government would no doubt have appealed itself, so we’re in the same place we would have been. We think ultimately this may be something that will have to make its way to the Supreme Court.
Also on the litigation front, we filed an amicus brief in Harper v. IRS, which challenges the John Doe summons that forced Coinbase to turn over the personal information of thousands of its customers to the IRS. Our brief explains to the court that by acquiring a list of individuals’ crypto addresses, the government is also acquiring the ability to see a complete picture of an individual’s finances without a warrant.
We filed a comment letter in the Treasury Department’s rulemaking on the definition of “broker” for third-party tax reporting purposes.
In brief, we argued that the definition proposed by the Department is far too broad: It could compel mere software developers to collect sensitive personal information about the users of their software and report that information to the IRS.
Our comment letter explains why that breadth runs counter to the clear statutory authority Congress set out in the Infrastructure Investment and Jobs Act, and also explains why such a broad standard would be an unconstitutional compulsion of speech and an unreasonable search and seizure of the records of both software developers and users of said software.
Our executive director Jerry Brito gave a talk to a group of developers on the state of play in Washington. If you’d like a roundup of where things stand with crypto in Congress and the agencies, it’s well summarized in this hour-long talk, which you can watch here.
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