It’s been over six months since the Infrastructure Investment and Jobs Act was passed with its cryptocurrency reporting provisions intact. If left unamended, those provisions will require exchanges, miners, and software developers to report the name and address of each “customer” as well as any business engaged in a transaction of $10,000 or more in cryptocurrency to report the customer’s name, address, taxpayer identification number, amount paid, date, and nature of the transaction. Worse yet, it’s only six months until the reporting requirements will start to go in effect.

Much has happened in 2022 thus far, so it is understandable that the issue lost the spotlight. Soaring inflation, Canada’s mass freeze on bank accounts, Russia’s invasion of Ukraine, and the like have all been well deserving of our attention. Yet in the last week, both a pair of senators and Coin Center brought the reporting provisions back into focus.

First up, Senators Cynthia Lummis (R‑WY) and Kirsten Gillibrand (D‑NY) introduced legislation to create a regulatory framework for cryptocurrencies where much of the focus is on designating regulatory authority. In his analysis of the bill, Cato’s Jack Solowey wrote, “The question that the Lummis‐​Gillibrand bill seeks to answer is less ‘whether’ it is the SEC or the CFTC that has a role to play in crypto regulation so much as ‘when’ each agency does.” However, the bill also included language from Representatives Patrick McHenry (R‑NC) and Tim Ryan’s (D‑OH) bill that seeks to redefine the broker definition (section 6045) and repeal the reporting requirement (section 6050I) that were enacted in the Infrastructure Act. While a full repeal of both sections is the most desirable route, the balance struck in the McHenry‐​Ryan proposal appears to be the most politically‐​feasible option right now.

Second, Coin Center announced that they are officially suing the Treasury Department. Jerry Brito explained one of the driving forces behind the decision when he wrote, “Forcing citizens to collect highly intrusive information about other citizens, and report it to the government without a warrant, is unconstitutional under the Fourth Amendment.” I couldn’t agree more.

As I noted in my briefing paper on the cryptocurrency provisions in the Infrastructure Act, it was only a matter of time before the issue would be taken to the courts. Although the Supreme Court has held that the Fourth Amendment does not apply when the government seeks records held by a third party (i.e., financial institutions), section 6050I of the tax code requires individuals to report on their peers where no third party is involved. Notably, section 6050I was enacted after the Supreme Court’s decision on the third‐​party doctrine and has yet to be challenged—until now, that is.

Coin Center’s case leads with two major claims. The first claim argues it is a violation of the Fourth Amendment to force people to collect information about their peers­­­­­­­—essentially deputizing them as law enforcement investigators. The second claim then argues that it is a violation of the First Amendment to force politically active organizations (e.g., think tanks and charities) to create and report lists of their donors as is required under the current provisions. It will take time for the case to unfold, but both claims have major implications not just for the cryptocurrency industry, but the financial system as a whole.

Whether it is in enforcing a provision of the tax code or the Bank Secrecy Act’s (BSA) requirements, the fact remains the same that the government should have to “prove before a judge that it has reasonable suspicion warranting a search of our private papers.” It may make it harder for law enforcement to have to get a warrant to investigate someone’s financial activity, but protecting citizens from the unchecked hand of the state is the reason the Constitution exists. The government does not get to ignore the Constitution just because it’s “inconvenient.” Whether it is through the amendment or the lawsuit, it’s time for the law to change.

Although it’s unfortunate that this surveillance has survived for so long, it’s good that it’s being thrust into the spotlight now. The Supreme Court did not hold that the BSA violated citizens’ rights to financial privacy in the 1970s, but the Justices did recognize that technological change could easily mean that the BSA would violate those rights. And today’s financial world is much different, a fact acknowledged by current Supreme Court Justices Gorsuch and Sotomayor.

In 2001, the Supreme Court recognized that technology used to surveil the inside of a home from afar (e.g., thermal imaging) without a warrant was a violation of the Fourth Amendment. Likewise, in 2012, the Supreme Court held that installing a GPS tracker on a vehicle without a warrant was a violation of the Fourth Amendment. And then in 2018, the Supreme Court held that accessing cellphone location data without a warrant was a violation of the Fourth Amendment.

If Coin Center’s case goes to the Supreme Court, there’s a real chance that the law will not only be ruled unconstitutional, but also that the case will open the door for additional long‐​needed changes to strengthen Americans’ constitutional protections.