Governor Mark Gordon of the U.S. state of Wyoming recently signed a bill preventing the forced disclosure of private keys in a move to protect the privacy of digital asset owners.
The incoming law reads “No person shall be compelled to produce a private key or make a private key known to any other person in any civil, criminal, administrative, legislative or other proceeding[s].”
To pass as a private key under the law, it must be “held by a person, paired with a unique, publicly available element of cryptographic data, and, associated with an algorithm that is necessary to carry out an encryption or decryption required to execute a transaction.”
From the effective date, courts in Wyoming will no longer compel individuals to provide access to any private keys that grant access to their digital assets, digital identity or any other interests or rights to which the private key provides.
The only exception to this law applies when individuals are required to disclose the ownership or transfer of crypto during any lawful proceeding.
As the United States Congress struggles to put reins on the crypto, there has been an uptick number of cases where courts force the disclosure of cryptographic private keys.
In many of these cases, courts force the disclosure of private keys as part of discovery or other pre-trial motions.
The forced disclosure of private keys by courts fundamentally contradicts how private keys are designed to work.
Private keys are the wrong tools to use 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 a user from theft and unauthorized access to their digital assets or digital identity.
When a court requests the disclosure of a private key, they ultimately have access to the digital assets and identities protected by the keys.
Jon Callas, the director of technology projects at the Electronic Frontier Foundation, a non-profit defending 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 offering her testimony in favor of Wyoming’s private-key disclosure law, said: “The court could order a disclosure or an accounting of all the digital assets that are held.”
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