The governor of the state of Wyoming, United States, Mark Gordon, has recently signed a bill that prevents forced disclosure of private keysthis in order to protect the privacy of the owners of digital assets.
The incoming law says: “No person shall be compelled to produce a private key or disclose it to any other person in any civil, criminal, administrative, legislative or other proceeding.”
To pass as a private key under the law, it must be “in the possession of a person, paired with a unique and publicly available piece of cryptographic data, and associated with an algorithm that is necessary to perform required encryption or decryption.” to execute a transaction”.
As of the effective date, Wyoming courts will no longer require individuals to provide access to any private key that allows access to their digital assets, their digital identity, or any interest or right other than the private key. provide.
The only exception to this law applies when individuals are required to disclose ownership or transfer of cryptocurrencies during any legal proceedings.
As the US Congress strives to gain more control over the crypto industry, there has been an increase in the number of cases where the courts compel the disclosure of private cryptographic keys.
In many of these cases, the courts compel disclosure of private keys as part of discovery or other pretrial motions.
Forced disclosure of private keys by courts fundamentally contradicts the way private keys are designed to work.
Private keys are the wrong tools for discovery
A private key is an alphanumeric code used to authorize transactions and prove ownership of a blockchain asset. Private keys are encrypted to protect the user against theft and unauthorized access to their digital assets or digital identity.
When a court requests disclosure of a private key, it ultimately has access to the digital assets and identities protected by the keys.
Jon Callas, director of technology projects at the Electronic Frontier Foundation, a nonprofit that advocates for digital privacy, free speech and innovation, said the courts “don’t even want the key, they want the data.”
Mary Beth Buchanan, a former federal prosecutor who offered his testimony in favor of Wyoming’s private key disclosure law, said that “the court could order a disclosure or an accounting of all digital assets held.”
In an essay, Blockchain Commons, a nonprofit organization that advocates for an open, interoperable, and secure digital asset infrastructure, explained that US courts are not prepared to handle private keys.
Blockchain Commons explained that court staff lack the expertise to protect private keys. A single private key that has to pass through different hands during a case poses a greater threat to the security of private keys.
Wyoming wants to protect privacy
US Senator Cynthia Lummis, known for her ardent support of Bitcoin and for pushing for clearer regulation of digital assets in the country, has said in the past that privacy is a way of life in Wyoming.
Speaking to Cointelegraph about the bill, Sen. Chris Rothfuss, co-chair of a digital assets committee in Wyoming, said the bill aims to provide “clarity on the legal status of a private key and how it should be treated.” by the courts.”
“The intent of the law is to clearly protect the privacy interests and property rights of holders of digital assets. It is about providing courts with proper guidance on the legality of private keys,” Rothfuss explained.
As a state, Wyoming has taken some of the most crypto-friendly approaches to regulating crypto in the United States. Although it has the smallest population in the United States, in 2021 Wyoming became the first jurisdiction to recognize decentralized autonomous organizations as limited liability business entities.
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