President Biden signed the Infrastructure Bill into law on November 15, 2021. The crypto industry has raised concerns regarding the controversial crypto tax that was incorporated into the bill even before it was signed. The two major issues for crypto are:
• The bill requires all brokers to report crypto transactions, although who falls as broker was not clearly defined.
• The bill requires that recipients of transactions over $10,000 must report to the government within 15 days the sender’s Social Security number and the nature of the transaction, among other personal information.
The second one is particularly disquieting for the crypto community as the bill is seen as invasive to privacy aside from defeating the purpose of crypto, which is decentralization. The 4th amendment in the US Constitution actually grants privacy to its citizens, “the right of the people to be secure in their persons, houses, papers, and effects.”
The US government believes that cryptocurrency is a tool for digital crime and crypto critics have stated that if one has nothing to hide, then there shouldn’t be any hesitation in complying with regulations. It is not as simple as it’s made out to be though. Privacy is priceless for so many reasons that’s not in any way connected to criminal activities.
Why Privacy is Invaluable
Privacy International states, “Privacy enables us to create barriers and manage boundaries to protect ourselves from unwarranted interference in our lives, which allows us to negotiate who we are and how we want to interact with the world around us. Privacy helps us establish boundaries to limit who has access to our bodies, places and things, as well as our communications and our information. The rules that protect privacy give us the ability to assert our rights in the face of significant power imbalances. As a result, privacy is an essential way we seek to protect ourselves and society against arbitrary and unjustified use of power, by reducing what can be known about us and done to us, while protecting us from others who may wish to exert control.”
Privacy is every human being’s right and everyone has the right to keep any personal information confidential to protect themselves from the “unjustified use of power.” Power, in this case is not limited to authorities. It could be as simple as selling your personal information for targeted ads on social media and as malicious as identity theft or bank accounts getting wiped out.
How to Keep Your Privacy in the World of Crypto
If you want to protect your privacy as you navigate crypto, here are some things you can do.
• Use decentralized exchanges. Most centralized exchanges use KYC to comply with regulations and they require identification.
• Use a VPN to mask your IP address. Without a VPN, the government or enterprise can locate your physical address through your IP address. Once an entity does this, they have knowledge of who you are, where you live, and all your personal and financial transactions.
• Limit your crypto purchases online to companies or entities that don’t need to know your name and address.
• Use privacy coins such as Monero for transactions. Monero transactions are untraceable and the identities of both senders and receivers are kept anonymous.
• Use a secure and privacy-centric wallet. Use XMRWallet, an open-source free Monero wallet that allows you to send and receive XMR instantly while remaining in complete control of your coins and keys.
The cryptocurrency tax reporting provisions in the infrastructure bill will take effect in January 2024, but cryptocurrency lobbyists are already calling out for amendments and standalone bills to amend the provisions. In the meantime, make a habit out of these five tips to safeguard your privacy in the crypto ecosystem.