Crypto asks First- POLITICO

It is not clear that the sanctions actually prohibit reciting code, melodic or otherwise. But they include what appears to be the first-ever ban on interacting with blockchain addresses controlled by self-executing code (sanctions normally prohibit transactions with accounts controlled by specific people or entities). And as crypto advocates consider legal challenges to the sanctions, they are tapping into First Amendment objections.

A settlement over the constitutionality of the sanctions would reopen decades-old questions about the code’s legal status. In all likelihood, it will be just the first major skirmish in a broader battle over the First Amendment’s application to blockchain systems, one that crypto advocates have been predicting for years.

In the early 1990s, the Justice Department launched an investigation into a programmer who had released an encrypted messaging system, Pretty Good Privacy, under the logic that the software—which had the potential to impede U.S. spying capabilities—was considered munitions and therefore subject to export bans. The government eventually dropped the case, and in 1999 the Ninth Circuit Court of Appeals ruled on First Amendment grounds in favor of another programmer, Daniel Bernstein, who challenged the application of export controls to cryptographic code.

This week, the Electronic Frontier Foundation, which represented Bernstein in the 1990s, expressed reservations about the Tornado Cash sanctions, arguing that the government does not have the power to prohibit the spread of computer code.

The EFF did not immediately respond to a request to discuss its First Amendment reservations in more depth. But crypto advocacy group Coin Center, which is considering a lawsuit over the sanctions, elaborated on its First Amendment objections in a lengthy analysis published Monday. The analysis argues that both the intent and effect of the sanctions is to have a chilling effect on people exploring the very idea of ​​cryptocurrency mixers.

While this affects only a niche class of blockchain applications, the question of how far First Amendment protections extend to transfers of information in blockchain systems may have more profound implications. Bitcoin advocates have long argued that both Bitcoin’s source code and Bitcoin transactions are protected by the First Amendment.

But what if they are wrong and the government can ban Bitcoin?

Many legal experts argue that speech protection for computer code is context-dependent, weakening or disappearing when someone executes the code with a computer.

“People will argue that it’s more akin to action than it is to speech,” First Amendment attorney Bob Corn-Revere, a partner at Davis Wright Tremaine, told me.

But Corn-Revere, who served on Bernstein’s legal team, said that since that case there has been a lack of court rulings on the case. As new software applications have raised new legal dilemmas, he said, new guidance on where and how computer code crosses from the realm of speech to the realm of action has yet to follow.

“That’s the unanswered question,” he said, “as to where the courts go.”

Another unlikely crypto-world alliance reveals how unpredictable the fault lines surrounding the new technology can be.

As POLITICO’s Sam Sutton reported today for Pro Subscribers, the crypto industry is flexing its growing muscle on the Hill to convince lawmakers to stay out of the stablecoin business. The Federal Reserve has explored the concept of a “digital dollar” for some time now, and rep. Jim Himes (D-Conn.), who released a Fed digital dollar proposal earlier this year, told Sam that not only private stablecoin providers view a central bank digital currency, or CBDC, as a “potential threat,” banks doesn’t like it either, seeing it “as a potential disruption to their very profitable payment systems.”

It’s a remarkable alliance if only because, like you may have heard (often) the crypto and banking industries don’t exactly agree with each other on much. Presumably neither did Sens. Kristen Gillibrand, a progressive standard bearer, or Cynthia Lummis, from deep red Wyoming, who sponsored this year largest piece of crypto legislation. The next unlikely team-up around a crypto-political issue – if it ends up being one around the regulations classification, international relationship, or maybe even rural revitalization — will officially make a trend, according to old newsroom rules. — Derek Robertson

Crypto may be down, but it looks like the “meme coins” are making a comeback.

The mostly worthless joke crypto tokens – especially highlighted by Elon Musk in the case of Dogecoin, which he has strengthened so consistently that it is more or less stopped being a joke – has seen a sudden jump in value lately even in the midst of the general crypto downturn, with Dogecoin by almost 11 percent during the last week at the time of writing, and Shiba Inu almost 20 percent. (And yes, they’re almost all still named after dogs, from “Akita Inu” to “Zelda Inu.”)

Of course, this is a matter of degrees. The current value of Dogecoin hovers around eight tenths of a cent. Shiba Inu are mere fractions of a dime stretching into six figures. Trading these coins is essentially a game: there are no promises of technological transformation, financial anonymity or wealth creation, just playing with small amounts of money on your phone.

Provided, as always, one doesn’t get too greedy, they’re probably one of the lower stress, and certainly one of the lower stakes, ways to dip your toe into the crypto market – but to be clear, as they say on forums and subreddits which make up the communities that are essentially these coins. raison d’etre, “this is not financial advice.” — Derek Robertson

Keep in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakaes ([email protected]); and Heidi Vogt ([email protected]). follow us @DigitalFuture on Twitter.

Ben Schreckinger covers technology, finance and politics for POLITICO; he is a cryptocurrency investor.

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