Marta Belcher: Reframing Privacy for the Digital Age

The battle is looming and is real. The battle, as Marta Belcher sees it, is the fight for online privacy, censorship resistance and freedom from surveillance.

Take the bill proposed by U.S. Senator Elizabeth Warren (D-Mass.), officially called the Digital Asset Anti-Money Laundering Act. It’s “pretty shocking, extremely broad and would have far-reaching effects on both the entire crypto space and on privacy technologies in general,” says Belcher, a civil liberties and cryptocurrency attorney. She is also the president and chair of the Filecoin Foundation, head of policy at Protocol Labs, special counsel to the Electronic Frontier Foundation, and member of the Zcash Foundation Board. (Belcher has more jobs at this very moment than many people will have in their entire lives.)

Marta Belcher is a speaker at CoinDesk’s Consensus festival in April.

This very moment, to her, is urgent. “We’re in this really interesting moment in time where our important privacy and civil liberties battles, which are being fought in the crypto sphere, actually have application and effect far beyond crypto,” says Belcher.

In a spirited defense of civil liberties and crypto’s ability to protect them, Belcher opens up about what she sees as the biggest threats to privacy, how the issue is bigger than just crypto and why “I think it’s really important, as a community, to make sure that we are properly standing up and fighting.”

Interview has been condensed and lightly edited for clarity.

What first got you into this strange intersection of crypto, law and civil liberties?

I’ve always been interested in technology and civil liberties. I was in law school when the [former National Security Agency consultant Edward] Snowden disclosure happened [in 2013]. And, post-Snowden, I worked on a book as a research assistant about mass surveillance. I was really affected by the extent to which we are surveilled on a day-to-day basis in ways that are, I think, quite shocking.

Pre-Snowden, we had no idea. And post-Snowden we know, but we don’t necessarily think about it or pay attention to it. And I still find it extremely chilling. And I’m very interested in the idea that we can create technologies that enable us to actually import anonymity, resistance to surveillance, and resistance to censorship. So cryptocurrency, to me, fundamentally, is such an important tool for civil liberties.

How do you see the lay of the land right now with respect to the battle for online privacy?

What we’ve seen over the course of the last few years has been that governments around the world, especially in the U.S., have been increasingly expanding the surveillance of the traditional banking system onto crypto.

We’re at a bit of an inflection point. Because the ethos of crypto is really the exact opposite, right? The whole point of crypto is to protect civil liberties. So we’re in this really interesting moment in time where our important privacy and civil liberties battles, which are being fought in the crypto sphere, actually have application and effect far beyond crypto.

When you say “battles,” what do you mean specifically?

Obviously one very large thing that you have to talk about in this context is Tornado Cash, right? [The U.S. Treasury Department’s sanctioning of Tornado Cash, the decentralized crypto mixing service.] The second is Senator Warren’s bill, which is pretty egregious from a privacy and civil liberties standpoint.

Let’s start with Senator Warren’s bill. What do you find most objectionable?

The bill would fundamentally do two things. First, it would include pretty broad surveillance and registration requirements on effectively all participants in blockchain networks. That includes software developers, miners and log creators.

Second, it would effectively ban privacy-enhancing technologies and blockchain networks. And so from a civil liberties perspective it’s pretty much a disaster.

Other than that, you love it!

The bill says that a large swath of participants in blockchain networks would need to register as money service businesses. They would actually have to register with the government as a money service business, and would have to develop very complicated anti-money laundering programs. And they have to surveil their users, collect the personal information of every person who’s using their software and file reports with the government about those transactions.

And, of course, that’s not actually possible, right? If you’re a miner or a validator, the whole point of this technology is that you have no idea who’s using the software. That’s the point. So compliance is not just onerous but literally impossible in blockchain networks. It really would grind the blockchain ecosystem in the U.S. to a halt.

So that’s the first thing the bill does. The second thing the bill does is it prohibits all financial institutions, which includes the money service businesses, from the first part. That really broad, expansive group that is now being considered money service businesses – they’re prohibited from handling, using, or transacting with digital asset mixers, privacy coins and any other anonymity-enhancing technology.

Effectively, it is banning using privacy-enhancing technologies, which includes privacy coins. It’s pretty shocking, extremely broad and would have far-reaching effects on both the entire crypto space and on privacy technologies in general.

What else do you see as a looming battle?

I would frame it as, in some sense, the crypto space and also the civil liberties space are playing both offense and defense.

How so?

A lot of what we’re doing right now is just playing defense. In a post-FTX [failed crypto exchange] world, there are increasingly bills and proposed regulations that are targeting the ability to transact privately. So one thing that we need to do as a space is play defense, to try to kill those bills.

Right. What does it look like to go on offense?

We’ve seen a few lawsuits over these important privacy battles, including Tornado Cash. Obviously those take a very long time to resolve, and it may or may not resolve the right way. But I do think that these are important battles that we can play offense on. We’ve also seen lawsuits over, for example, the infrastructure bill, which also has surveillance requirements.

Read more: Marta Belcher – Elizabeth Warren’s New Financial Surveillance Bill Is a Disaster for Privacy and Civil Liberties

In terms of playing offense, a lot of what happens right now in the traditional financial system is mass surveillance, in my view, and is actually unconstitutional.

Interesting. What’s the argument?

We’ve sort of just come to accept, for some reason, that a lot of our financial transactions get turned over to the government by default, without a warrant, in the traditional banking system. And this is just sort of normal surveillance that happens under the Bank Secrecy Act and other laws. And in my view, the [U.S. Constitution’s]Fourth Amendment is pretty clear.

For those of us who are rusty on the Bill of Rights, can you give us a refresher?

The Fourth Amendment says that in order to get information about citizens, the law enforcement needs to go get a warrant. They need to have probable cause. They need to go to a judge and get a warrant and then they can get information about citizens, right? But there is sort of a giant gaping hole in the Fourth Amendment in the shape of the third-party doctrine.

Oh, for sure. What’s the third-party doctrine again?

The third-party doctrine is this idea that if you hand over your information to a third party, then you have lost your reasonable expectation of privacy in that information. So whether that third party is a bank or Google or Facebook or your cellphone provider, if you’ve handed over information to a third party that information can go to the government by default without a warrant.

In the financial arena I think we have a really interesting moment where we have people who are very motivated, because of the ethos of crypto, to protect financial transactions. And I think it’s really important because over the last few years the Supreme Court has actually been chipping away at the third-party doctrine and sort of recognizing that the things that you could learn about someone from their third-party transactions are very different now than 30 years ago. Because we live our entire life through third parties [such as Google and Facebook and our phones].

Earlier you said that these battles are not just about crypto but have implications beyond the space. How so?

For both Tornado Cash and Senator Warren’s bill, I really think that people who care about privacy in general – even if they don’t care at all about cryptocurrency – should be extremely concerned.

There’s this idea where some people say, “Oh, well, that’s about money.” And it’s OK if all anonymity-enhancing technologies are banned in the money context, or it’s OK if software developers are arrested abroad because they worked on something that involves money. And I think that’s ridiculous. It’s also very dangerous, because what we’ve seen in the space with Tornado Cash [with the targeting of private transactions] is a broader targeting of anonymity-enhancing technologies, beyond just crypto.

So if you care about Tor, if you care about encryption, if you care about the ability to do things anonymously, you should care about a bill that broadly targets anonymity-enhancing technologies, right?

What else do you see as key inflection points in the future with respect to online privacy? What else is keeping you up at night?

One of the things that’s so difficult about this space, and one of the things that’s so difficult about policy in general, is that at any moment any random bill can be dropped. And while that bill may not advance, future bills might borrow language from that bill.

What’s an example?

Senator Warren’s bill. Even if the bill doesn’t advance, when we have the next omnibus [spending] bill – similar to the infrastructure bill, a must-pass 1,000-page bill where there’s absolutely no time or interest in debating any of the small clauses – I am worried that the language that people will borrow, or try to push in, will be the same language from Senator Warren’s bill.

So even when you see random bills that don’t seem to be something you should worry about, I think it’s really important, as a community, to make sure that we are properly standing up and fighting. Because at literally any moment there could be an omnibus bill where this language just gets thrown in.

We saw that with the infrastructure bill, right? No one knew that that was coming. And it was sort of a shock to see two provisions that could have a massive impact on the cryptocurrency space added just as a throwaway. So part of what makes this all so scary is that anything could happen at any time.

We’ll leave things on that cheery note. Thanks again, and see you at Consensus!

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.