The GUARD Act’s push for mandatory identity verification in crypto transactions is drawing fresh criticism over its potential to erode First Amendment protections, stifle innovation, and lock everyday users out of digital tools. In a piece published this week on Crypto Briefing, John Coleman laid out the risks, arguing the bill’s sweeping requirements could create a lasting surveillance infrastructure that outlives any initial policy goal.
How the GUARD Act targets anonymity
The legislation, still in early committee stages, would require crypto platforms to collect and store government-issued ID for nearly every transaction. Proponents say it’s about cutting off money laundering and terrorist financing. But Coleman and other critics argue the rule does far more. It effectively kills pseudonymous transactions — a feature that has underpinned crypto’s appeal for activists, journalists, and ordinary people in repressive environments.
First Amendment concerns
Compulsory identity checks don’t just affect privacy. They touch speech. A journalist covering a controversial protest, a whistleblower sending funds to a legal defense fund, or a donor supporting an unpopular cause — all rely on anonymity to avoid retaliation. If the GUARD Act becomes law, those individuals would have to hand over personal data just to move money. That, Coleman wrote, is a direct collision with the First Amendment’s protection of anonymous political expression.
The timing isn't great. Courts have repeatedly struck down laws that force speakers to identify themselves before engaging in protected activity. The GUARD Act’s architects are betting this time is different. Maybe they're wrong.
Surveillance infrastructure fears
Coleman also flagged what he called the bill’s “architecture of permanence.” Once the ID-collection system is built, it’s hard to take down. Agencies could repurpose the data for other investigations. Hacks become more damaging — a breach of a crypto exchange’s database would now leak names, addresses, and biometrics, not just wallet addresses.
This isn’t a hypothetical. The infrastructure the GUARD Act mandates would be the largest government-tied identity database ever built for financial transactions. And once it exists, the temptation to expand its use — for tax audits, for immigration enforcement, for social credit-style scoring — is real.
What’s next for the bill
The GUARD Act faces a markup session in the House Financial Services Committee next month. Amendments are expected. Coleman’s article is part of a broader push by civil liberties groups to water down the ID requirements or carve out exemptions for small transactions and non-custodial wallets. Whether those changes survive floor votes is the open question.
The next concrete date to watch is the committee hearing on June 10, where witnesses — possibly including Coleman — are set to testify. That’s when lawmakers will have to answer for whether they’re building a wall against crime or a cage for dissent.
