US President Biden’s administration wants to be able to seize bitcoin from people more easily. A 61-page report by the US attorney general advocates, among other things, stretching the federal government’s ability to seize cryptocurrencies.
#Bitcoin #Biden https://t.co/XLSDe92vMI pic.twitter.com/iSqONnSkQU
— Matthew R. Kratter (@mattkratter) October 27, 2022
Looser rules
If adopted, the plans would impact criminal forfeiture. In doing so, a conviction will no longer be required to permanently seize property.
In other words, even without criminal charges, someone’s bitcoin could be seized. You can read the whole report back here.
A new Digital Asset Coordinator Network was also announced. This is a nationwide network with more than 150 federal prosecutors who will be trained in “drafting civil and criminal forfeitures”.
A forfeiture is different from confiscation. With the latter, ownership is not automatically transferred to the state; with a forfeiture, it is.
Due to the pseudonymous nature of cryptocurrencies, it is difficult to confiscate bitcoin. However: with cryptocurrencies held on (regulated) platforms, such as crypto exchanges or custody platforms, it is a different story. According to statistics, nearly 200 cryptocurrency seizures were made in the US by 2021, worth $466 million.
Since 2014, the FBI, Secret Service and Homeland Security Investigations have collectively confiscated nearly $680 million worth of cryptocurrencies. The US Internal Revenue Service’s Criminal Investigation team was even more successful between 2018 and 2021, seizing a whopping $3.8 billion.
No judicial oversight
Yet they now want changes to the rules. First, the attorney general wants to make forfeitures easier, thus not requiring judicial oversight. The court will then not be needed, but the relevant agency concerned may do this itself.
The federal government can use such an “administrative forfeiture” to “take away” almost anything, apart from real estate and property worth more than $500,000.
This limit currently (still) applies to cryptocurrencies, but it should therefore be reduced (or removed).
Importantly, this leaves shockingly little protection for crypto owners. Once seized, the property is quickly forfeited. The aggrieved must take action and file claims, according to Forbes.
According to an Institute for Justice report, federal agencies rejected more than a third of all claims filed for the cash they seized as “defective”. Often, they pointed to “technical reasons”.
The best answer to this possible US policy: take bitcoin into your own hands.
Not Your Keys, Not Your Coins.
Congress
Currently, most cryptocurrencies are seen as communities, rather than securities. This makes it even trickier, as commodities, unlike securities, “do not allow for forfeiture of unlawfully obtained profits from criminal activity”.
For now, this is still a proposal that first needs to be approved by Congress. But considering it comes from the quiver of the Biden administration, its chances of success are not slim.
