January 22, 2021 |James Messi
Cryptocurrency has always made governments a little wary, and because of this many owners of Bitcoin and other cryptocurrencies have found themselves defending their rightfully owned currency, or in a naturally defensive position thanks to the original reception of the crypto market as a whole.
Is this you?
Wallets are exactly what they sound like in the crypto world – they hold the funds that you put into them. More specifically, they hold the keys to the funds. There are many types of wallets but here we will only talk about two broader functions – unhosted wallets and hosted wallets. Many wallets exist on a server like CoinBase, Binane or the like – those wallets are hosted on a third-party server where the keys are still available to you, but not stored with you.
Unhosted wallets are just that – wallets not hosted by a third-party server. This includes any wallets that run solely in your browser (MyEtherWallet) or any hardware wallets. These are the wallets that used to raise flags when law enforcement wanted to investigate something.
Cryptocurrency owners have lived in a state of mild fear that they could be the next victim of an unlawful seizure by their government. Thankfully, Judge Zia M. Faruqui’s legislation seems to be going in the direction of restricting unhosted wallets less, not more.
Faruqui seems to have come to this conclusion by posing a simple equivalence – what’s harder to track? Cash or Cryptocurrency? The answer is simple, unfortunately. Faruqui states: “Cash poses a greater challenge to law enforcement than cryptocurrency in unhosted wallets.”
Faruqui understands the technology that makes Bitcoin so intriguing to many of its owners. Because of his deeper understanding, he doesn’t have to carry the concerns as the average detractors of cryptocurrency.
Faruqui has used the tools that crypto offers to track suspected criminal’s movements and catch unlawful deals. Armed with this knowledge and the use of the U.S. civil forfeiture law that gives the U.S. the right to seize funds traceable to a crime, Faruqui has seen more success than he would if these deals were done with cash.
Cash is a huge problem for this reason – it’s difficult to track exactly where each physical bill has been before and if it’s wrapped up in some sort of nefarious activity. With Bitcoin, that’s not the case.
There is always the fear that someone will accidentally deal a coin that may have been somewhere it shouldn’t have – but for most users, this will never be the case. In fact, because of the tools that are available to Bitcoin and now the court judges are greatly in favor of those who have anything stolen from them. Civil forfeiture laws are explicitly pitted against criminals and while the proceeds may not be immediately seen, the law is in place to protect those who are not doing anything illegal.
Faruqui may be the first but won’t be the last judge to take a favorable approach towards crypto. Expect legislation to be in favor of law-abiding citizens that deal in cryptocurrency.