EFF and Open Rights Group today submitted formal comments to the British Treasury, urging restraint in applying anti-money-laundering regulations to the publication of open-source software.
The UK government sought public feedback on proposals to update its financial regulations pertaining to money laundering and terrorism in alignment with a larger European directive. The consultation asked for feedback on applying onerous customer due diligence regulations to the cryptocurrency space as well as what approach the government should take in addressing “privacy coins” like Zcash and Monero. Most worrisome, the government also asked “whether the publication of open-source software should be subject to [customer due diligence] requirements.”
We’ve seen these kind of attacks on the publication of open source software before, in fights dating back to the 90s, when the Clinton administration attempted to require that anyone merely publishing cryptography source code obtain a government-issued license as an arms dealer. Attempting to force today’s open-source software publishers to follow financial regulations designed to go after those engaged in money laundering is equally obtuse.
In our comments, we describe the breadth of free, libre, and open source software (FLOSS) that benefits the world today across industries and government institutions. We discuss how these regulatory proposals could have large and unpredictable consequences not only for the emerging technology of the blockchain ecosystem, but also for the FLOSS software ecosystem at large. As we stated in our comments:
If the UK government was to determine that open source software publication should be regulated under money-laundering regulations, it would be unclear how this would be enforced, or how the limits of those falling under the regulation would be determined. Software that could, in theory, provide the ability to enable cryptocurrency transactions, could be modified before release to remove these features. Software that lacked this capability could be quickly adapted to provide it. The core cryptographic algorithms that underlie various blockchain implementations, smart contract construction and execution, and secure communications are publicly known and relative trivial to express and implement. They are published, examined and improved by academics, enthusiasts, and professionals alike…
The level of uncertainty this would provide to FLOSS use and provision within the United Kingdom would be considerable. Such regulations would burden multiple industries to attempt to guarantee that their software could not be considered part of the infrastructure of a cryptographic money-laundering scheme.
Moreover, source code is a form of written creative expression, and open source code is a form of public discourse. Regulating its publication under anti-money-laundering provisions fails to honor the free expression rights of software creators in the United Kingdom, and their collaborators and users in the rest of the world.
Source code is a form of written creative expression, and open source code is a form of public discourse.
EFF is monitoring the regulatory and legislative reactions to new blockchain technologies, and we’ve recently spoken out about misguided ideas for banning cryptocurrencies and overbroad regulatory responses to decentralized exchanges. Increasingly, the regulatory backlash against cryptocurrencies is being tied to overbroad proposals that would censor the publication of open-source software, and restrict researchers’ ability to investigate, critique and communicate about the opportunities and risks of cryptocurrency.
This issue transcends controversies surrounding blockchain tech and could have significant implications for technological innovation, academic research, and freedom of expression. We’ll continue to watch the proceedings with HM Treasury, but fear similar anti-FLOSS proposals could emerge—particularly as other member states of the European Union transpose the same Anti-Money Laundering Directive into their own laws.
Thanks to Marta Belcher, who assisted with the comments.