Washington, D.C. (Aug. 22, 2024) – The DeFi Education Fund (DEF) and Blockchain Association (BA) have jointly filed an amicus brief supporting a challenge to the Securities and Exchange Commission’s (SEC) Consolidated Audit Trail (CAT) program. This brief highlights the unprecedented privacy concerns posed by the CAT, particularly for digital asset market participants.

The CAT program, the largest government-mandated collection of personal financial data in U.S. history, aims to create a centralized database of all securities trades in U.S. markets. This information would be accessible to SEC regulators and thousands of private staff members without requiring a warrant or probable cause.

The amicus brief argues that the CAT’s implications for digital assets are especially problematic. Given the SEC’s stance that many digital asset market participants qualify as exchanges, brokers, or dealers, these entities could be subject to the CAT’s extensive reporting requirements. This could potentially link personally identifiable information with blockchain wallet addresses, exposing users’ past, present, and future transactions to unprecedented scrutiny.

Laura Sanders, policy counsel at Blockchain Association, noted, “The CAT program’s sweeping surveillance of personal financial data, including potentially sensitive blockchain transactions, is a significant overreach that threatens to normalize invasive government oversight of our everyday lives. Left unchecked, initiatives like CAT can quietly erode our constitutional rights. The crypto community stands firm against such excessive financial surveillance regimes and urges lawmakers to recognize the broader implications of this particular project.”

Amanda Tuminelli, the DeFi Education Fund’s Chief Legal Officer, added, “The Consolidated Audit Trail poses real harm to Americans’ personal financial privacy. That harm is compounded if digital asset transaction information is included in the CAT. As we explain in our amicus brief, the SEC’s current position on digital assets – as expressed in multiple enforcement actions – will likely result in the SEC telling digital asset trading platforms that they have to report detailed transaction information to the CAT. Since the CAT also collects personally identifiable information connected to transactions, the great fear that we express to the court is that the CAT will become a repository of user information associated with particular wallet addresses. The privacy concerns here are severe.”

For more information about the lawsuit, please visit the NCLA website.