In a recently concluded virtual event, Bill Foster, Democratic Representative and co-chair of the Congressional blockchain caucus, called on his fellow lawmakers to create a regulatory framework that would allow for third parties to reverse fraudulent or criminal transactions on the blockhain.
Foster believes that unless a legal intervention by the Congress or the public can resolve the problem of ransomware, U.S. regulatory agencies should file to create a legal framework that would help “unmask” cryptocurrency holders’ identities, in a bid to reverse transactions linked to criminal activity.
Foster is known as a physicist and is a member of the Democratic Party, representing Illinois. Foster believes that the proposition would help protect the U.S. government and its citizens from ransomware attacks. He currently co-chairs the blockchain caucus with Democratic Rep Darren Soto, and Republican Reps Tom Emmer and David Schweikert.
Foster describes this method as one of the “fundamental decisions” on crypto regulation that could be made in recent years. Foster further argues:
“I’ve just said about three things there that will drive the crypto purists berserk, like the trusted third party and so on. But in fact, there’s not a technological alternative that I’m aware of. For most people [if] they’re going to have a big part of their net worth tied up in crypto assets, they’re going to want to have that security blanket of a trusted third party that can solve the problem.” he continued.
According to Foster, new laws crafted for specifically this reason would require crypto addresses to be created with pseudo-anonymity, in which a summoning court or a third party, could be able to access the real-world identity of a crypto user through a backdoor key.
Foster conjectures that without the proposed measures, threat actors may continue to take advantage of crypto to facilitate criminal activity. Foster asks:
“Is there a court that you can go to unmask the participants, but also is there a trusted third party or court that you can go to, to reverse fraudulent or mistaken transactions?”
The proposal appears to be in response to the Colonial Pipeline hacks, which have recently been the subject of an inter-agency investigation leading to the retrieval of 63.7 BTC from the threat actors.
“But in those rare instances where something fraudulent, criminal or mistaken, as happened, that you have to be able to unmask and potentially reverse those transactions,” Foster stated.
According to Foster, the measure would only be used in exceptional cases, and that anonymity would still be protected by default for “99.9% of the time” or within the bounds of current regulatory circumstances.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.