Bill Foster, a Democrat, congressman and member of the US Congressional Blockchain Caucus, is calling for the ability to reverse cryptocurrency transactions in ransomware cases.
The representative of the Democratic Party of the United States, Bill Foster, ha saying that the nation should create a new law that allows victims of ransomware and other frauds to go to court to request the reversal of transactions made with cryptocurrencies, when they are involved in cases of extortion and fraud.
For Foster, who is also co-chair of the Congressional Blockchain Caucus According to the House of Representatives of the United States Congress, the reversal of transactions on the blockchain is a measure that will be appreciated by all those users of digital assets, who own large amounts of money in cryptoassets and who become victims of cyberattacks or scams. On the other hand, “purists” and fans of cryptocurrencies and their privacy “will go crazy” with this proposal, said the congressman.
As such, it seems that the request of the representative of the Democratic Party of the United States has no place for the defenders of the crypto industry, who were quick to react in the face of Foster's "crazy" proposal, although many also claimed to be aware of the possible intentions behind this request.
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Identity in the hands of “trusted” third parties
The proposal presented by Foster indicates that the US government should create a new regulatory framework that allows it to authorize a court to know and store the real identity of all people who use digital assets, and who are associated with cryptographic addresses. In this way, as explained by the congressman, in the event that a crime is committed involving cryptocurrencies, the court will be able to identify the responsible person and issue a sentence to order the reversal of fraudulent transactions.
In his proposal, the court or government-appointed authority would protect users' real identities with a "very tightly guarded" password.
“I just said three things that will drive crypto purists crazy, like the trusted third party, etc. But in fact, there is no technological alternative that I know of… For most people, if they are going to have a large portion of their net worth in digital assets, they will want to have that security blanket of a trusted third party that can solve the problem.”
Despite Foster's belief, on Reddit, user “DepNeanderthal"He pointed out that placing trust in a third party is a bad idea, especially if it is a third party within the government.
“Anyone who trusts a ‘trusted third party’ of this kind is a fool. Government and trust are as close to each other as the North Pole and the South Pole.”, the user commented.
Distorting the concept of privacy
Foster also said there is a growing sense within Congress that if cryptocurrency users are engaging in private, anonymous transactions, then they are “de facto participants in a criminal conspiracy.”
The congressman's misconception of privacy and generalization, assuming that all users seeking to protect their privacy on the blockchain are "criminals," led several members of the crypto community to point out the urgency of cryptocurrency organizations to educate really to regulators and legislators about the foundations and functioning of the digital industry.
The Congressional Blockchain Caucus was born with the idea of studying the foundations and principles of technology blockchain, which supports the operation of cryptocurrencies such as Bitcoin y EthereumHowever, Foster’s recent comments during Axios’ virtual event raised questions in the crypto community about whether the congressman and the organization really understand how blockchain works, and the meaning of the word “decentralization” within the crypto industry.
But is Foster's proposal possible?
The truth is that to achieve what the congressman proposes, the government must literally force the miners of a blockchain network, which are under its jurisdiction, to fork the network where the transaction was made; this of course, if the miners have enough computational power to do so, in order to be able to reverse the transactions made. Another option for the government would be to directly attack the network.
On the other hand, although Foster points out that the “reversal” of cryptocurrency transactions would only apply in exceptional cases such as ransomware, fraud or other illicit activity, transactions that are included in a block together with the “illegal transaction” would also be reversed and would return to the mempool, waiting for miners to take them and confirm them again. Although it sounds “simple”, the reality is that it is a rather complicated process that could unleash complete chaos on the network and its users.
Eyes set on the cryptocurrency industry
For some time now, regulators in the United States and elsewhere have been targeting the cryptocurrency and digital asset industry, considering them tools that facilitate and promote financial crimes and illicit activities.
Although this completely erroneous concept about how cryptocurrencies work has been refuted by many with evidence, and even crypto surveillance companies working hand in hand with regulators and governments have demonstrated the high level of transparency that blockchain networks offer to investigate and track crime cases, many regulators still insist on considering crypto assets as instruments that facilitate money laundering.
In the United States, regulations on cryptocurrencies are still not entirely clear, although the nation has accelerated studies and research on the crypto industry, to understand all its implications and define new regulatory frameworks, as the industry has grown and consolidated.
Interest in the crypto industry is growing
Recently, Maxine Waters, a member of the U.S. House of Representatives since 2013 and chairwoman of the House Financial Services Committee, announced the creation of a working group made up of 12 members of the Democratic Party, including Foster, to delve deeper into cryptocurrencies. The idea of this group, as explained by the congresswoman, is to help in the creation of a regulatory framework that addresses the rapid growth of the cryptocurrency industry and that guarantees national security, monetary sovereignty and consumer protection.
Regulatory interest in cryptocurrency transactions has also been fueled by recent ransomware attacks on companies including Colonial Pipeline and JBS.
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