The United States Knew How to Track Bitcoin
RegulationBit News Today2 min read
The US government's efforts to track and regulate Bitcoin transactions date back nearly a decade. Their mission was to develop ways to monitor the digital currency, including transactions on decentralized exchanges and between individuals.
The software, which goes by the code name Iris, can track people who conduct Bitcoin transactions from the same computer as on the dark web or through mathematics to determine the owners of IoT devices.
After the IRS alleged a Bitcoin user did not pay taxes on a capital gain, the courts ruled against the user and reconfirmed that Bitcoin is property and not currency, paving the way for the IRS to use Iris to track and tax trades. It is unclear how many other agencies and law enforcement jurisdictions are using the Iris program. ## US Regulatory Attempts on Bitcoin
The Virtual Currency Partnership program expanded to include Department of the Treasury financial intelligence center, the Federal Bureau of Investigation, the Drug Enforcement Administration, the Internal Revenue Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Postal Inspection Service, and the U.S. Secret Service.
Bitcoin advocates are concerned that the government's unfettered surveillance of the cryptocurrency may run afoul of constitutional limits on law enforcement's ability to spy on ordinary Americans in their homes. Bitcoin users are likely to be especially sensitive to privacy concerns, because they chose Bitcoin as an alternative to traditional banking in the first place. ## A Legislative Attack
A representative introduced two bills that could effectively outlaw most private Bitcoin transactions. One bill would require financial technology providers, including Bitcoin miners, developers, and merchants, to obtain customer identification information and gift licenses, and maintain records of all Bitcoin transactions.
The second bill, if passed, would require digital wallets to allow law enforcement access to users' Bitcoin wallets. It is not clear if or when the bills would be voted on.
Critics argue the legislation would be a death knell for Bitcoin, because it would allow easy government surveillance of all Bitcoin transactions. ## What's Next for Bitcoin?
Given the combined might of several arms of US law enforcement all focused on unmasking Bitcoin users, the most important safeguard Bitcoin advocates can pursue is privacy. Alternatives such as Monero or Zcash are already far ahead of Bitcoin in this regard. Techniques such as make sure to never use Bitcoin from the same computer that you use to access the dark web, run Bitcoin from a virtual private network, and never identify yourself on social media. For broader privacy, Bitcoin advocates encourage the public to educate themselves about cybersecurity, privacy, and the constitution, including the right to privacy.
Bitcoin users and advocates across the US must carefully consider the very real threat posed by these surveillance programs, and the very real possibility that the US government may soon attempt to crack down on the cryptocurrency. Many in the Bitcoin community are understandably concerned about a government crackdown, and in recent days there has been a clear call for Bitcoin users to learn about and implement privacy techniques.
