HN Reader

The Patriot Act itself was supposed to be temporary and “narrow.” Two decades later it’s the foundation for a financial dragnet that assumes privacy is the problem rather than a basic right.

Just like encryption, once privacy becomes associated with criminality, you end up weakening security for law-abiding users and concentrating power in a few regulated intermediaries. That’s not healthy for innovation, or democracy.

I'm going to take a different tack on this one.

--- Point 1

Crime is real. Can we agree on that?

If you were in charge of identifying and locating criminals based on on-chain transaction data, what are the list of guidelines you'd put together to use PUBLIC DATA to determine suspicious behavior?

If you're competent, at all, the list would look like this. Let's not immediately jump to "self custody is gonna be outlawed"

----

Point 2

Bitcoin was designed this way. This data is public. This is HOW THE DAMN THING WORKS.

This article is written by a "Seasoned Bitcoiner", which is a term that reveals just how cooked they are. They haven't come to terms with the fact that the Bitcoin price is predicated on being the first, but certainly not the best public blockchain for realizing the goals of a global decentralized currency, whether you agree that's even a possibility or not.

Some people adopt ignorance -- Others were born in it, molded by it.

The headline is not supported by the article.

The actual list of "suspicious activities" in the article is about pooling, structuring, delaying transactions -- the stuff you do to hide activity, whether for good or bad.

It says nothing whatsoever about self-custody. The author makes the imaginary leap because they say they personally recommend doing all those things with self-custody. But they're totally separate things.

So as far as I can tell, the headline is just false clickbait.

They also claim:

> If enacted, any user who leverages these tools will be flagged as a suspicious... and could potentially be sent to prison.

I don't think that's the case? Having a transaction considered suspicious doesn't send you to prison. At best it seems like traditional banks might not permit a transaction, or it could be used as supporting evidence for separate actual illegal activities like money laundering? But going to prison requires being convicted of an actual crime. Not just activity that is "suspicious".

Loading up a single address with too many UTXOs degrades the entropy of a public-private key pair

does bitcoin or UTXO's somehow for some reason generate multiple PUBLIC keys for the same private key?

On a long enough timeline, having anything stored in local hardware is going to be suspicious. Not surprised to see government embrace of crypto lead to increased scrutiny.

Considering how they're clamping down on anonymity wherever they can, crypto wasnt going to escape their clutches for very long. How long before its seperated from it original aim and just turned into a gambling token.

This is inaccurate and in a hilarious way. Treasury is not coming after Bitcoin. There's an update in an ongoing rulemaking process that got reported here[0] as banning mixing and privacy tools. It may have been blown out of proportion[1], but I am not a lawyer, and certainly banning these tools would be bad. The thing is, Bitcoin's not private—every transaction is public for everyone to download. It's Twitter for your bank account. And that comes with serious privacy, safety, and boring commercial counterparty risks that should be addressed. These kinds of tools exist to mitigate that problem. The irony is that Bitcoin has largely refused to address this obvious issue, so no, Treasury isn't coming for Bitcoin. Indeed, there been years of people arguing Bitcoin would be just fine with no privacy protections. [0] https://www.therage.co/us-government-to-bring-patriot-act-to... [1] https://x.com/valkenburgh/status/1966174324701778071"

>Loading up a single address with too many UTXOs degrades the entropy of a public-private key pair and makes it easier to brute force a user's private key.

Is there a realistic risk there? If I use an address a million times, how much weaker is it? And how feasible would it be for an attacker to brute for it?

This is pure click bait that relies on a deliberate misreading of a 2023 notice [1] that tries to imply that "self custody" is being attacked in any form.

All that this is saying is that the government will try to track money movement to pursue criminal activity, including, unfortunately the criminal activity of moving money in a way that looks sketchy. This is something that we have decided we have to live with.

[1] https://www.federalregister.gov/documents/2023/10/23/2023-23...

I feel like growing up is realizing that the government is just a big gang. They do what they want and will enforce with menace what they want. They can change the rules, take your stuff and it ain't stealing because they said so. Sigh.

> We shouldn't have to live in a world where standards cater to the lowest common denominator, in this case criminals, and make things worse off for the overwhelming majority of the population.

Monero fixes that.

Find a way that is costs trump money or prevents him from making money, and this stuff will vanish instantly.

I'm confused how the connection was made between "here are our guidelines for suspicious activity" and "self custody is outlawed"

I always wonder why monero isn’t more popular?

The Bitcoin lobby are definitely getting their money's worth.

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

With a bank you can have anti-money laundering and bank secrecy. Transaction are known by the bank, can be subject to subpoena or automatic reporting, but are non-public.

If you want privacy on Bitcoin you need to do things that look a lot like money laundering. Governments banning money laundering isn't a surprise. The value of Bitcoin, if transactions are fully public and attributable to pseudonyms, is questionable.

In some ways, the problem Bitcoin has is that it is inflexible. Governments want to change the rules in finance from time to time, traditional finance adapts.

thats ma boi trump, back at it again with the absolute opposite of what he said hed do!

Not a huge surprise, unfortunately.

The article has no references, but even so, it's no wonder that Monero has gone up in the past day.

This article is nonsense.

The guidance doesn't mention anything similar to self custody and the Patriot Act itself has expired: https://en.m.wikipedia.org/wiki/Patriot_Act

It's the worst kind of clickbait, and is actual, real fake news.

Bitcoin maximalists are learning that having a non-fungible and fully traceable ledger might be a problem. Even Satoshi called this out! As is, BTC is somewhat of a privacy nightmare. All of your transactions are on the public ledger for anyone with basic knowledge of statistics to correlate and see all of your transactions. Blockchain Analytics is big business!

All the things the Treasury is considering to be "suspicious activity" simply can't be tracked with something that's non-fungible and untracable like Monero. This suspicious activity - aka privacy - is just how all monero transactions are done.

This would come as no surprise, since all the original promises of Bitcoin circa 15-ish years ago are long dead. The turning point occurred when all exchanges agreed to report transactions directly to the IRS. I say this as someone who had an interest prior to that but lost all interest when the Crypto community sold out its ideals and consented to certain regulations in the interest of mass marketing cryptocurrency for the purpose of speculative profit.

Self-Custody is problematic for any government as it allows any citizens to accumulate any kind of wealth they have and simply "transfer" it overseas without any oversight and in a ridiculously short amount of time. Some countries (rich/developed countries) allow free capital transfer but these transfers are regulated and also some jurisdictions are sanctioned. Transferring money abroad, from the perspective of the origin country, just moves the money inside the origin country system from one party to another. So it is well within the visibility and control of the state, especially for large amounts of money.

Today, you can brain-memorize $1bn in Bitcoin and move yourself from one country to another; and depending on the country; might be able to exercise different amounts of that purchasing power. Control moves from the origin country to the reception country.

Russia and China were always hostile because of this. The Chinese authorities regarded Bitcoin as some sort of capital flight scheme. Now both Europe and the USA are too. I think Bitcoin only chance for survival, in its current form, is if these two poles do use it as a mechanism to attack one another. Mining is already balanced between East and West.

It will be interesting to see how the pro-Trump crypto bros react to this. Likely by now the whole group has had a chance to invest heavily in various altcoins or whatever will be the beneficiary of government largesse, so these proposed (and difficult to enforce) restrictions are likely intended just to pump those for quick profits.

I'd argue that Bitcoin has been effectively immune to attacks like this by governments for nearly a decade.

A lot of people keep looking for technology solutions to political problems. 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.

You can argue about whether you can get away with it due to difficulty of enforcement, but all that does is turn us all into criminals. They won't put ALL of in jail, but they can put ANY of us in jail - the ones they don't like.

The tweet says "could be labled suspicious" the article says could be made illegal.

I've never heard of this website but if your only source is a tweet and you misrepresent it, I don't believe it.

I'll take bets: By EOY 2026 it will be legal in the US to use single use addresses

Hah. Trump is the most corrupt president in US history. Honestly, who didn't think he would corrupt Bitcoin while he was at it?

This author is being disingenuous. All of those actions are indeed suspicious. I am not a fan of the Patriot Act, but these new guidelines actually seem pretty reasonable to me.

If there would have been better policing of digital currency by its users against criminal actors, perhaps digital assets would be spared the attention and now regulation. Sadly, increasing adoption and privacy guarantees lure criminals same as legitimate users.

M question was on what legal/Constitutional basis does the Treasury have for expanding the Patriot Act? Is it because the law provides powers to the Treasury department to define areas that the law should apply? Or is it a case where the administration (once again) is assuming it can do something, the Constitution be damned?

As someone who hasn't read the article, is holding bitcoin in your own wallet going to become illegal? Also, which wallet do you guys recommend, I use Coinbase but it sucks.

Does no one else find it weird seeing anything from this administration "anti-Bitcoin" at all? I wouldn't be surprised by this headline during a previous administration, but generally speaking, this administration has been very Bitcoin-friendly (and Bitcoin institutions friendly right back). To be clear, the simplest answer is "sure but that doesn't mean they have to agree on everything". But I would like to propose that if you ask the simple question of "who does this benefit?" it may suggest we are witnessing a different phenomenon here.

I think this might be the first indication that what we currently call "institutional Bitcoin supporters" are not "Bitcoin supporters" at all, or rather, what they call "Bitcoin" is not what you and I call "Bitcoin". Services like Coinbase and BTC ETFs don't really suffer from this development at all. In fact, I think it's quite obvious that obviously benefit from something like this (at least from the first-order effects). What's the alternative to self custody? Well... third-party custody. Especially since they are already bound up by KYC rules, right? Their is a cynical reading that there's nothing inconsistent with this development if you consider "institutional Bitcoin's" goals to primarily be replacing existing financial power structures with themselves. "Bitcoin" is just a means to an end. Their goals were only incidentally aligned with individual BTC holders since they were previously in similar circumstances as the "out group". Previous administrations were as suspicious of "Bitcoin companies" as any individual Bitcoin holder, perhaps even more so. But that's not the case anymore. Bitcoin companies have successfully been brought into the fold, so it's not even that they're necessarily "betraying" the values of Bitcoin true believers, you might argue that interpretation of shared values was entirely inferred to begin with.

Critically though, I think an important consequence of this is that Bitcoin purists and skeptics should realize that they arguably now have more in common than not, at least in the immediate term, and may be each other's best allies. In my experience, for most the existence of Bitcoin, its skeptics haven't really seen Bitcoin as a "threat." Instead, to admittedly generalize, their critiques have been mostly about Bitcoin being "broken" or "silly" or "misunderstanding the point of centralized systems", etc. These aren't really "oppositional" positions in the traditional "adversarial sense," more dismissive. In fact, the closest thing to an "active moral opposition" to Bitcoin that I've seen is an environmental one. IOW, Bitcoin true believers think about Bitcoin way more than Bitcoin skeptics do. Similarly, Bitcoin true believers really have nothing against skeptics other than... the fact that they occasionally talk shit about Bitcoin? IOW, Bitcoin skeptics are not "the natural enemy Bitcoin was designed to defeat".

But if you think about it, "institutional Bitcoin" sort of embodies something both these camps generally have hated since before Bitcoin. Whether you believe Bitcoin to be a viable answer or not, it is undeniable that the "idea" of Bitcoin is rooted in the distrust of these elitist financial institutions, that evade accountability, benefit from special treatment, and largely get to rig the larger system in their favor. Similarly, I don't think Bitcoin skeptics like these institutions or are "on their side". In fact, perhaps they'd argue that they predicted that Bitcoin wouldn't solve any of this and would just be another means of creating them. But IMO what they should both realize is that the most important threat right now is these institutional players. They are in fact, only "nominally" Bitcoin in a deep sense. From the perspective of true believers, their interests are actually in now way "essentially" aligned with any "original Bitcoin values," and from the perspective of skeptics, the threat they pose has very little to do with their use of "the Bitcoin blockchain".

They are arguably just another instantiation of the "late stage capitalist" playbook of displacing an existing government service in order to privatize its rewards. Coinbase could be argued to have more in common with Uber than Ledger wallets. Instead of consolidating and squeezing all the value from taxis though, the play is to do the same with currency itself. It is incidental that Uber happened to be so seemingly "government averse". In this context, it's actually helpful to cozy up to the government and provide the things government departments want that make no difference to fintech's bottom line (such as KYP). In fact, that might be their true value proposition. Bitcoin only enters the conversation because in order to replace a currency, you do... need a currency. Bitcoin was convenient. It was already there, it had a built-in (fervent) user base that was happy to do your proselytizing for you, and even saw you as a good "first step" for normies that couldn't figure out to manage their own wallet. The Bitcoin bubble was already there, why fight it when you can ride it?

Again, I think this is highly likely to be against the values of Bitcoin true believers and skeptics alike, and I also think that if the above is true, it represents an actual danger to us all. Recent events with credit card processors have already demonstrated that payment systems have proven to be incredibly efficient tools at stifling speech. In other words, this is arguably an "S-tier threat", on par with or perhaps worse than any sort of internet censorship or net neutrality. If so, we should treat it as such and work together.

Well, hopefully this will help prevent Bitcoin's biggest use case, which is criminal finance and money laundering. Why wouldn’t we want that?

Lobbyists, Assemble!

This is not terribly surprising. Control of the monetary system is a key responsibility of the US federal government; it was always going to be the case that if Bitcoin became a meaningfully-sized part of the financial system the government would impose regulation.

Now we get to see how enforceable it is (and I suspect it's more enforceable than people wanted to assume... They can jail you indefinitely for refusing to divulge a password if the court finds it is not a violation of your Fifth Amendment rights to divulge it. https://xkcd.com/538/).

Inevitable. Remember Roosevelt's gold confiscation.

https://en.m.wikipedia.org/wiki/Executive_Order_6102

It was forbidden to have more than 5 ounces of gold.

Bitcoin is a perfect microcosm for the tech sector in what happens when people who don't know how something works and refuse to understand it, try to replace it.

Every aspect of the modern financial system exists for a reason. It evolved over time to deal with problems. Things like reversible transactions are a feature not a bug.

Bitcoin is where all the gold bugs went who lamented the end of the gold standard. Most of these people didn't understand that at no point in history was the US dollar 100% backed by gold (or silver, originally). Never.

What backs the US dollar isn't gold or oil or anythihng else we dig up out of the ground. It's long schlong of the US military.

I've also said that crypt currency exists only because the government hasn't shut it down. All it would take is a policy change from the US government to say banks who have access to the US financial system cannot trade in Bitcoin and it would be over. Yes you could still have wallets (at least until the government starts going after Bitcoin farms, which again it could do) but what would you do with those coins?

Bitcoin is not, never has been and never will be an escape from the perils (some real, many imagined) of fiat currencies.

Assuming this is true, how would this be enforced and tracked?

The screenshot-of-a-screenshot seems to be talking about mixers (e.g. TornadoCash). But ultimately, what did you expect?

> Loading up a single address with too many UTXOs degrades the entropy of a public-private key pair and makes it easier to brute force a user's private key.

Well that's not true... The key doesn't change because you added more bitcoin

"The Patriot Act. Read it."

Financial privacy and national security are fundamentally at odds. With financial privacy and real freedom, you can hire a competing army.

The state will never allow large scale financial privacy because it poses an existential threat to the state.

I'm convinced the the capital-c Crypto industry hates crypto. Don't use it as a currency! Give us interest free loans (stablecoins) and gamble!