Embattled Administration Pushes Midnight Controls on Financial Tech
Well, that was quite a week, wasn’t it? As I write, it’s a little unclear who is running the country right now, as the putative executive does not seem to be doing much executing—let alone communicating—these days. What is clear is that the real engine of the state, the administrative apparatus, is still chugging along just fine. Unelected bureaucrats continue to roll out significant regulations not only during a lame duck period, but amidst an apparent regime crisis to boot.
Even during normal times, outgoing administrations push through last-minute rules while they still have power. These are called “midnight regulations,” and they often include particularly sweeping and onerous rules that might not otherwise pass muster. You can view the midnight regulation phenomenon easily on a graph: like clockwork, rules will spike in the last year of an administration.
It’s easy to see why midnight regulations occur. An administration will only be in power for so much longer. They want to be able to push whatever last effort controls they can before they are pushed out the door. Since they don’t have much time, the rules will tend to be sloppy and receive less vetting than they otherwise would. And because the declining regime will really want to make things stick, they may reach farther than they did before they were racing against the clock. It’s “one more good one for the road” thinking.
It’s a bit remarkable to see midnight regulations still being promulgated during an apparent crisis of regime legitimacy, however. The chaos is not stopping government bodies from rolling out new controls on technology.
The most egregious is probably the Treasury Department’s proposed expansion of financial surveillance on cryptocurrency. The rules would require warrantless data collection on the senders and recipients of cryptocurrency transactions over $3,000 when involving users that choose to host their own wallets.
Expanding government financial surveillance is obviously horrible for privacy. It also saddles cryptocurrency users with a massive security risk. Just a few weeks ago, we learned that the Treasury Department had succumbed to a major cyberattack. The government can’t keep its systems secure, yet it wants to have access to even more of our data. Want to keep data safe? Don’t collect it in the first place.
Not only is this proposal an inconsistent expansion of the already constitutionally-questionable Bank Secrecy Act, what I call “the PATRIOT Act for money,” it afforded an insulting fifteen days over the Christmas break for the millions of affected cryptocurrency users to comment on the controls.
Even worse, the Treasury Department apparently miscalculated the comment deadline given the number of days they had afforded the public. Rather than openly admitting their mistake and advertising that the public would have
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