14 ms·

EFF to FinCEN: Stop Pushing for More Financial Surveillance

194 points by panarky 6y ago

ve55 6y ago
The way I usually phrase this situation is something like "The goals of a strong government are in direct opposition to the goals of most modern cryptocurrencies", and this is yet another subset of those goals where we can see the forces fighting against each other. I find it hard to convince myself cryptocurrency can win out in the long-term, as the more rules they find ways to skirt around via technology and decentralization, the more they will be clamped down upon by regulations. You can spend a decade developing a provably-anonymous cryptocurrency (which we have indeed now done), and all it takes to break your anonymity is a law that forces you to report all transactions on a form, or else face prison time. FinCEN was particularly aggressive and quick to act here, so I do hope they change course, especially given the unusually short comment period. This is where cryptocurrency users should be thankful for some of the less-centralized bodies in the ecosystem (e.g. Coinbase) who will happily spend millions (if necessary) to help fight these actions legally on behalf of their users and business.
- jeofken 6y ago
  With cryptocurrency you can travel across a border with a million $ worth, by just keeping a 12-word recovery phrase on you. Cryptocurrencies can never be stopped, and will more likely outlive governments than vice versa. Long live tax evasion! Vive la liberté!
  - bouncycastle 6y ago
    I don't think you should be travelling with the 24 word recovery phrase. That one should be encrypted, backed up, and stored in a safe place
    - jeofken 6y ago
      Symmetrically encrypt it and tell the border guard it’s your moms laptop password
    - krageon 6y ago
      You can memorise it, that's still safe
    - csomar 6y ago
      Brain Wallet? You could easily memorize the 24 words.
      - bouncycastle 6y ago
        If so, don't use anything from literature or too easy to remember, see https://www.coindesk.com/brainwallet-bitcoin-wallet-shouldnt-use https://www.coindesk.com/brainwallet-bitcoin-wallet-shouldnt... I guess for the purpose of travel, and you really need to, you can always use symmetric encryption to encrypt your seeds with a strong passphrase, then travel with that.
  - thefounder 6y ago
    The issue is converting that crypto into cash.
    - refurb 6y ago
      This is what I don’t get. Great, you can transfer Bitcoin to anyone for cheap, anywhere in the world. But that Bitcoin is useless to you or whoever you give it to unless it’s converted to currency. That’s where the gov’t puts it’s grip. Move as much Bitcoin wherever you want. Who cares. Want to convert to dollars or Euros or Yen? That’s where the gov’t steps in and say fine - prove who you are for this transaction. With the public Bitcoin ledger they can now connect you back to the source of the money.
      - intotheabyss 6y ago
        Just wrap your Bitcoin into renBTC on Ethereum, and exchange it for DAI stablecoin. Then, deposit it into a zero knowledge mixer contract called tornado.cash and withdraw to a fresh address. Now you've broken the link. An entirely decentralized process of converting BTC into a stablecoin without an intermediary while maintaining some privacy.
        Karunamon 6y ago
        How many bites of the pie did you lose during those 4 transactions? Besides, you still need to convert DAI to fiat to use it IRL in most ways, DAI is just another form of space money despite being pegged to the dollar. I could also see criminalization of mixing tools being a thing.
        tuxxy 6y ago
        > How many bites of the pie did you lose during those 4 transactions? Probably between ~1-2%, if that.
        Karunamon 6y ago
  - volta87 6y ago
    The problem isn't tax evasion per-se, but rather logic inconsistencies. For example, I've met quite a bit of people that don't want to pay any taxes. Yet they all want for them and their goods to be able to use roads for free, roads that are built and maintained with taxes. That's actually ok: two incompatible goals just means you have to make a trade-off; welcome to engineering. The problem is that none of them understand why they can't have both. In their minds, there is no trade-off to make, because they want both, feel entitled to both, and having both should be possible. No idea why they are not able to understand that both things are incompatible. If there is some option that allows both that I am missing, they didn't manage to explain that.
    - deleted 6y ago
      [deleted]
    - logicchains 6y ago
      >For example, I've met quite a bit of people that don't want to pay any taxes. Yet they all want for them and their goods to be able to use roads for free, roads that are built and maintained with taxes. That's a complete strawman and you know it. Any libertarian would say they'd be happy to pay to use privately-run roads. >No idea why they are not able to understand that both things are incompatible. If there is some option that allows both that I am missing, they didn't manage to explain that. Privately owned/built roads! These even already exist: https://en.wikipedia.org/wiki/Private_highways_in_the_United_States https://en.wikipedia.org/wiki/Private_highways_in_the_United.... What's hard to understand about roads being built by people that aren't the government? Yes such roads might not be as optimally placed/efficient, but the libertarian's goal isn't efficiency, it's minimising what they consider the moral injustice of taxation.
      - deleted 6y ago
        [deleted]
    - jimz 6y ago
      While I certainly know people who for whatever reason fail to understand the relationship between taxes and benefits, I don't think they are really at all a significant portion of people who have taxation-related policy objections. The problem is amplified in America because of the long history of institutionalized subjugation and discrimination and the liberal use of violence both at home and abroad are taxpayer funded. Thanks to civil and administrative asset forfeiture that adds up to billions of dollars worth of cash and property seized without the government establishing a link to actual criminality that they can establish probable cause on (or for administrative forfeiture, there's no hearing at all, and they account for $500 million to $600 million a year). In a particularly galling and absurdist sort of way, Americans every day are paying for their own robberies, or paying in part for the settlement they receive after especially egregious cases manage to get past all of the legal hurdles protecting the authorities. Since most victims of what normal people would consider egregious abuse won't even get past that, we're talking about the victims of Chicago PD's systemic Holamn Square torture site and the likes, chipping in, along with their fellow citizens, while the perpetrators received pensions and when needed, covered for each other. All that are your taxpayer dollars at work. In some places, the police, with a hefty chunk of change from the Treasury and DoJ throigh "equitable sharing", are simply more incentized to use that taxpayer money to conduct more no-knock raids, because the war on drugs gets the feds involved which gets the local PD a chunk of federal funding as well. All that come directly from your tax dollars, in many cases far more than what goes into infrastructure. Your taxx dollars pay for the carceral state, they pay for ICE raids conducted through ruses and guises ordinarily illegal but not in the administrative law context. DHS has a discretionary budget of around $50 billion a year. A similar amount is earmarked for nondiscretionary disaster relief which pretty much lost all meaning lately. Of course, the agencies bring in somme revenue as well, but that's usually even worse news. In July an IG's report fouhnd that the DEA, without legally required congressional oversight, have been profitably laundering money for the cartels for most of the past decade, and had even somehow got involved in buying a private jet that was then left off initial budget reports. Like Aliens v. Predator, whoever wins, we lose, since this is self-justifying behavior, not in the public's interest but to create reasons for their own relevance. Some degree of fraud, waste,and abuse is bound to happen in all bureaucracies, but in America the impact isn't felt evenly. Black and brown parents have to have a second talk with their kids about encounters with the police. Immigrants, documented or not, pay taxes but receive either abbreviated or absolutely no means-t4ested benefits. In spit4e of contributing to the continued survival of social security, they're literally considered second-class citizens subject to indefinite detention. Or, for about a few thousand Americans, you'll experience the exact same because that's about how many Americans get deported a year to god knows where. And there's plenty of indicators showing that mere spending isn't really sufficient to achieve any of the goals we thought we could just throw taxpayer dollars at. HHS has a $2 trillion budget, almost half of that is used in conjunction with medicaid programs and grants, yet, neither party seems particularly happy with the status quo, not to mention that it excludes 20 million or so immigrants. And we have really convinced ourselves that money can cover up expertise and competency. American farmers are seeing their entire year's revenue coming from subsidies due to the trade war this year. For so many communities in this country, it makes perfect sense to wonder where the tax money go, since frankly it's pretty difficult to see sometimes, and what's most visible sometimes is also the most disturbing, egregious, and kafkaesque one can witness in the system. When that's the vector you interact with what your tax dollars pay for, it's perfectly logically consistent to want actual services yet not want to pay for the abuse. And we don't do public infrastructure stuff well anymore anyway. Think how long it took for the 2nd Avenue subway to go up 3 stations.
  - vkou 6y ago
    Sorry to burst the tax evasion bubble, but it is pretty easy to stop cryptocurrencies. Just require KYC at points of entry and exit into the ecosystem.
    - Nextgrid 6y ago
      This would still leave cryptocurrencies as a valid currency for the criminal underworld, and the points of entry/exit will become stolen/illegal goods/services. Not taking either side, just pointing out this fact.
      - st1x7 6y ago
        It's only valid for the criminal underworld if eventually there is a way to convert back to a legitimate currency and launder it efficiently.
        Nextgrid 6y ago
        Stolen goods seem like an efficient enough way, and I can't see theft going away even if you eliminate the "elephant in the room" which is drugs (by either decriminalizing them or hypothetically winning the war on drugs)?
        avianlyric 6y ago
        Theft doesn’t scale that very well. You try laundering $10 million by selling stolen goods at the pub. It’ll take you a while, and I can guarantee that the police are gonna notice. Even then you’re just turning your goods into cash. Which is still difficult to spend when buying high value assets like property. At some point if you’re a criminal that wants to spend their cash, and live in a developed country you need to turn your crypto into clean fiat in a bank account, or prove the crypto didn’t come from illicit sources.
        vkou 6y ago
        If criminals are the only people using cryptocurrencies, it becomes socially trivial to criminalize the possession of software that interacts with cryptocurrencies.
- CryptoPunk 6y ago
  The Soviet economy had a substantial black market, especially if you include the Blat system of favor-trading [1]. New York today is seeing growth of ostensibly illegal, unlicensed street vendors, in reaction to lockdown restrictions [2]. Government is not efficient, and cannot effectively enforce rules, so cryptocurrency will undoubtedly survive. [1] https://blogs.commons.georgetown.edu/rees-577-fall2016/2016/10/18/the-importance-of-blats-in-soviet-everyday-life/ https://blogs.commons.georgetown.edu/rees-577-fall2016/2016/... [2] https://nypost.com/2020/12/26/mayhem-in-the-streets-illegal-vendors-are-overtaking-nyc/ https://nypost.com/2020/12/26/mayhem-in-the-streets-illegal-...
  - gabereiser 6y ago
    I agree with this at the macro level. It’s easy for a government to strong arm an individual into regulation, a small company even. When the markets themselves shift, that’s when government is going to have a hard time regulating. Crypto, good and bad, is here to stay because government is slow to respond to shifts. What’s going to be interesting to see is how this government regulations vs the people’s needs play out. The street vendors are suppling a demand, there’s a need, illegal vending or not.
  - logifail 6y ago
    > Government [..] cannot effectively enforce rules Counter-example: pick any one of the (new) rules that are currently being enforced due to C19? Government may not be efficient, but from time to time may just be efficient enough to catch you and/or punish you. Shameless movie quote: "You've got to ask yourself a question: 'do I feel lucky?'"
    - sildur 6y ago
      Paraphrasing another movie quote: "with everyone criminal, no one will be".
      - logifail 6y ago
        > with everyone [..] Hmm, "everyone"? Q: What proportion of Bitcoin holders are actually using as an approximate alternative to fiat currency (regularly purchasing real life stuff using Bitcoin) vs holding and hoping to get rich?
- codethief 6y ago
  > You can spend a decade developing a provably-anonymous cryptocurrency (which we have indeed now done) Looks like I've been out of the loop. Which cryptocurrency are you referring to?
  - dannyw 6y ago
    Monero.
  - SCHiM 6y ago
    I think the op referring to monero (XMR).
  - koheripbal 6y ago
    Monero (XMR) is the most notable example, but there are other coins that implement the same technology of truly anonymous and untraceable transactions. FinCEN will not change their course. From their perspective, they would rather try to kill or stifle all cryptos than allow illegal activity to be done within that market without an ability to seize assets or trace funds. Right now they have total control over traditional non-cash monetary transaction - and the US gov't specifically has a long reach into the global economy to enforce things like OFAC and sanctions. Cryptocurrency openly defies that power base by design (censorship resistance). There is fundamentally no solution here where the two will play nicely together. Cryptos will simmer in the background as the section of the global economy they facilitate grows (black market transactions), and erode the western financial power base. It's mostly limited today by the lack of scalability in the coin networks. I wonder if there's a future where innovation in scalability allows for a single crypto to reign supreme globally and eliminate all national currencies in our lifetime. It would be a monumental shift of power, which will undoubtedly involve a great deal of political/technological struggle and civil chaos.
    - panarky 6y ago
      Monero priced in Bitcoin is down 60% in the last year and it's down 90% since its peak in 2018. If Monero's purpose is to be anonymous and untraceable, and Bitcoin's purpose is to be a store of value, then it appears the market prefers the store-of-value use case. There's a popular idea that crypto currencies are only good for illegal activity. But the evidence so far from a nearly trillion-dollar market says that avoiding law enforcement is not what's driving the crypto phenomenon. There's another popular idea that central bank money printing is devaluing national currencies when priced in crypto. I'm sure that's part of it, but inflating the money supply by 30% doesn't really justify a 10x increase in crypto valuations. It's a small sample size, but the handful of wealthy families I'm acquainted with who are investing 0.1% to 2% of their net worth into Bitcoin (and a little into Ethereum) are more afraid of a collapse of the western political order than central bank money printing. Institutions and high-net-worth individuals aren't looking for privacy for illicit transactions so they're not putting their wealth into Monero. They've witnessed or researched what the collapse of the USSR did to the ruble and asset prices in the former Soviet Union, and they're buying some insurance against a similar unraveling in the US and Europe.
TheChaplain 6y ago
I believe privacy advocates needs to be more involved in the financial sector for there to be any meaningful change and provide counter proposals to balance. The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. I often get shat on when mentioning that, especially by loud proponents of cryptocurrencies, but it is a real issue that must be resolved. Our old-fashioned bank system is far from perfect but it is harder to do illegal things unnoticed, banks report thousands of cases to authorities every year. Cryptocurrencies is the future, and we should not let our guard down allowing criminal elements to exploit it.
- ve55 6y ago
  We are happily open to suggestions on ways to stop crime that don't involve collecting any additional data, but I think you'll find it very difficult to come up with systems that satisfy both stakeholders here, as the way I see it they are at a constant impasse.
- AnthonyMouse 6y ago
  > The problem now is that a lot of cryptocurrencies are prime targets for money laundering The issue is that you can't actually solve this. It's already over. The premise of money laundering rules is that you have two conspiring parties transferring illicit gains between one another and the regulations have the bank as an intermediary informing on them to the government. The existence of cryptocurrency makes it possible to do this without an intermediary party. It has already happened and you can't put the genie back in the bottle. It doesn't matter how you regulate above-board exchanges and transactions in the US because the illicit transaction can occur digitally outside of the sphere of influence of a given country without using any of the intermediaries being subjected to the regulations. What it means is that all the costs of AML and KYC regulations are no longer buying you anything because actual criminals now have an end-run around them, but they're still costing you something, as the law abiding people trying to comply with the rules, for as long as they remain on the books.
  - ajkdhcb2 6y ago
etaioinshrdlu 6y ago
You know, I really would have thought that the Trump administration would have represented the "deconstruction of the administrative state": https://www.washingtonpost.com/politics/top-wh-strategist-vows-a-daily-fight-for-deconstruction-of-the-administrative-state/2017/02/23/03f6b8da-f9ea-11e6-bf01-d47f8cf9b643_story.html https://www.washingtonpost.com/politics/top-wh-strategist-vo.... This is the common framework that justifies reducing the activity of the US State Department, generally relinquishing the status of the USA as world police, and a sort of libertarian view of personal liberties. In that framework, you'd think the administration would be very against the government monitoring all financial transactions. Trump himself you'd think would greatly enjoy legally being able to anonymously move any amount of money around. Trump can personally direct FinCEN policy as it's part of the executive branch. Yet here we are, the policy is undistinguishable from the Bush or Obama years. There could have been silver linings for personal liberties to this administration if they actually stuck to the principles they claimed.
- stareatgoats 6y ago
  This may come as a shocker, but the principles that any politician claim sooner or later tend to crumble when faced with the realities of government. In the case of libertarian principles, what you find is that the core of the principles that survive the governing machine is but to relieve the rich of taxation and other cumbersome regulation. The pretty principles live on in the rhetoric, but any objective onlooker can not avoid perceiving them as hollow to the point of deception.
loraa 6y ago
It's not about crime or laundering. It's all about making sure normal people are paying taxes. The government is a joke.
drtillberg 6y ago
The main real-world uses for bitcoin are (1) evasion of currency controls and (2) facilitation of extortion and fraud. That's all illegal, btw. The surprise is FinCEN didn't act until now to align its surveillance of bitcoin with the rest of the financial world. I also would speculate that the short action timeline and comment period have a typically cynical purpose to deploy one of a grab-bag of regulatory actions at precisely the moment the price of bitcoin has again caused a stir. Bitcoin isn't worth fighting for here, sorry EFF, but it is a useful canary warning about the current state of low financial freedom and privacy (by historical standards) and surprising degrees of unofficial suppression of viable alt-moneys. I would be happily surprised if the FinCEN reg forced unlawful use cases out of the bitcoin ecosystem leaving a vibrant, healthy marketplace....
- CryptoPunk 6y ago
  >>Bitcoin isn't worth fighting for here, sorry EFF, but it is a useful canary warning about the current state of low financial freedom and privacy (by historical standards) and surprising degrees of unofficial suppression of viable alt-moneys. I would be happily surprised if the FinCEN reg forced unlawful use cases out of the bitcoin ecosystem leaving a vibrant, healthy marketplace.... This is a completely incoherent paragraph. In the first half you bemoan the lack of financial privacy and freedom, and in the second cheer on privacy-violating and freedom-suppressing FinCEN regulations.
  - drtillberg 6y ago
    Let me simplify it. The bitcoin ecosystem is a cesspool of ransomware payoffs, international money laundering and speculation. Eliminate 2 of those use cases via financial surveillance and I will be happily surprised if the 3d survives, or if any similarly robust marketplace springs up from the ashes. Because the bitcoin ecosystem is such a mess, it's not worth saving, in my opinion. It's a feature, not a bug, and it gives all alt-moneys a bad reputation. I don't like dragnet-style financial surveillance, in general. If it bothers you when applied to bitcoin for philosophical reasons, it should bother you more when applied to other alt-moneys with less nefarious uses.
hal-9-000 6y ago
The way I see it: Governments have already lost the battle with decentralized tech stacks - the ship has sailed. They can propose and push just about any regulation. They can start whitelisting/kyc Bitcoin wallets, trace transactions and whatnot, but almost all valuable protocols for p2p transacting are open sourced and we can always run a new blockchain network under the radar. The ability to own a locally generated key pair in such a network and, under the assumption that one already owns some assets tied to that specific network, one can freely transact and interact with other parties safely - is something that can never be regulated. While I'm transacting within boundaries of such a p2p network (i.e. not exiting to fiat) I should be safe. Needless to say that I'm expecting even more of the blockchain development going in these directions to make network resistant to government's regulatory attacks.
markkat 6y ago
We should not sacrifice privacy to make law enforcement easier. It's ok to make law enforcement work harder and less efficiently rather than the people they serve.
- Supermancho 6y ago
  I don't see how this is about "privacy". How are you defining that? I'm not even sure why anyone would cant to consider money exchanges "private". You want currency exchanges to be recorded for auditing, at the very least. The idea of invisible transaction causes and allows more harm than good. Fiat barter is always an option if you want to avoid a ledger.
  - markkat 6y ago
    n. The quality or condition of being secluded from the presence or view of others. n. The state of being free from public attention or unsanctioned intrusion.
todipa 6y ago
I would argue that these new regulations are in a way a breach of the Fourth Amendment, which is supposed to protect people from unreasonable searches. This seems like a search to me...
lucasnortj 6y ago
Crypto “currencies” are used by two kinds of people. Fools and criminals. It would be trivially easy for governments to prohibit their purchase and they should do so

194 points by panarky 6y ago

ve55 6y ago

The way I usually phrase this situation is something like "The goals of a strong government are in direct opposition to the goals of most modern cryptocurrencies", and this is yet another subset of those goals where we can see the forces fighting against each other. I find it hard to convince myself cryptocurrency can win out in the long-term, as the more rules they find ways to skirt around via technology and decentralization, the more they will be clamped down upon by regulations. You can spend a decade developing a provably-anonymous cryptocurrency (which we have indeed now done), and all it takes to break your anonymity is a law that forces you to report all transactions on a form, or else face prison time. FinCEN was particularly aggressive and quick to act here, so I do hope they change course, especially given the unusually short comment period. This is where cryptocurrency users should be thankful for some of the less-centralized bodies in the ecosystem (e.g. Coinbase) who will happily spend millions (if necessary) to help fight these actions legally on behalf of their users and business.

jeofken 6y ago
With cryptocurrency you can travel across a border with a million $ worth, by just keeping a 12-word recovery phrase on you. Cryptocurrencies can never be stopped, and will more likely outlive governments than vice versa. Long live tax evasion! Vive la liberté!
- bouncycastle 6y ago
  I don't think you should be travelling with the 24 word recovery phrase. That one should be encrypted, backed up, and stored in a safe place
  - jeofken 6y ago
    Symmetrically encrypt it and tell the border guard it’s your moms laptop password
  - krageon 6y ago
    You can memorise it, that's still safe
  - csomar 6y ago
    Brain Wallet? You could easily memorize the 24 words.
    - bouncycastle 6y ago
      If so, don't use anything from literature or too easy to remember, see https://www.coindesk.com/brainwallet-bitcoin-wallet-shouldnt-use https://www.coindesk.com/brainwallet-bitcoin-wallet-shouldnt... I guess for the purpose of travel, and you really need to, you can always use symmetric encryption to encrypt your seeds with a strong passphrase, then travel with that.
- thefounder 6y ago
  The issue is converting that crypto into cash.
  - refurb 6y ago
    This is what I don’t get. Great, you can transfer Bitcoin to anyone for cheap, anywhere in the world. But that Bitcoin is useless to you or whoever you give it to unless it’s converted to currency. That’s where the gov’t puts it’s grip. Move as much Bitcoin wherever you want. Who cares. Want to convert to dollars or Euros or Yen? That’s where the gov’t steps in and say fine - prove who you are for this transaction. With the public Bitcoin ledger they can now connect you back to the source of the money.
    - intotheabyss 6y ago
      Just wrap your Bitcoin into renBTC on Ethereum, and exchange it for DAI stablecoin. Then, deposit it into a zero knowledge mixer contract called tornado.cash and withdraw to a fresh address. Now you've broken the link. An entirely decentralized process of converting BTC into a stablecoin without an intermediary while maintaining some privacy.
      - Karunamon 6y ago
        How many bites of the pie did you lose during those 4 transactions? Besides, you still need to convert DAI to fiat to use it IRL in most ways, DAI is just another form of space money despite being pegged to the dollar. I could also see criminalization of mixing tools being a thing.
        tuxxy 6y ago
        > How many bites of the pie did you lose during those 4 transactions? Probably between ~1-2%, if that.
        Karunamon 6y ago
- volta87 6y ago
  The problem isn't tax evasion per-se, but rather logic inconsistencies. For example, I've met quite a bit of people that don't want to pay any taxes. Yet they all want for them and their goods to be able to use roads for free, roads that are built and maintained with taxes. That's actually ok: two incompatible goals just means you have to make a trade-off; welcome to engineering. The problem is that none of them understand why they can't have both. In their minds, there is no trade-off to make, because they want both, feel entitled to both, and having both should be possible. No idea why they are not able to understand that both things are incompatible. If there is some option that allows both that I am missing, they didn't manage to explain that.
  - deleted 6y ago
    [deleted]
  - logicchains 6y ago
    >For example, I've met quite a bit of people that don't want to pay any taxes. Yet they all want for them and their goods to be able to use roads for free, roads that are built and maintained with taxes. That's a complete strawman and you know it. Any libertarian would say they'd be happy to pay to use privately-run roads. >No idea why they are not able to understand that both things are incompatible. If there is some option that allows both that I am missing, they didn't manage to explain that. Privately owned/built roads! These even already exist: https://en.wikipedia.org/wiki/Private_highways_in_the_United_States https://en.wikipedia.org/wiki/Private_highways_in_the_United.... What's hard to understand about roads being built by people that aren't the government? Yes such roads might not be as optimally placed/efficient, but the libertarian's goal isn't efficiency, it's minimising what they consider the moral injustice of taxation.
    - deleted 6y ago
      [deleted]
  - jimz 6y ago
    While I certainly know people who for whatever reason fail to understand the relationship between taxes and benefits, I don't think they are really at all a significant portion of people who have taxation-related policy objections. The problem is amplified in America because of the long history of institutionalized subjugation and discrimination and the liberal use of violence both at home and abroad are taxpayer funded. Thanks to civil and administrative asset forfeiture that adds up to billions of dollars worth of cash and property seized without the government establishing a link to actual criminality that they can establish probable cause on (or for administrative forfeiture, there's no hearing at all, and they account for $500 million to $600 million a year). In a particularly galling and absurdist sort of way, Americans every day are paying for their own robberies, or paying in part for the settlement they receive after especially egregious cases manage to get past all of the legal hurdles protecting the authorities. Since most victims of what normal people would consider egregious abuse won't even get past that, we're talking about the victims of Chicago PD's systemic Holamn Square torture site and the likes, chipping in, along with their fellow citizens, while the perpetrators received pensions and when needed, covered for each other. All that are your taxpayer dollars at work. In some places, the police, with a hefty chunk of change from the Treasury and DoJ throigh "equitable sharing", are simply more incentized to use that taxpayer money to conduct more no-knock raids, because the war on drugs gets the feds involved which gets the local PD a chunk of federal funding as well. All that come directly from your tax dollars, in many cases far more than what goes into infrastructure. Your taxx dollars pay for the carceral state, they pay for ICE raids conducted through ruses and guises ordinarily illegal but not in the administrative law context. DHS has a discretionary budget of around $50 billion a year. A similar amount is earmarked for nondiscretionary disaster relief which pretty much lost all meaning lately. Of course, the agencies bring in somme revenue as well, but that's usually even worse news. In July an IG's report fouhnd that the DEA, without legally required congressional oversight, have been profitably laundering money for the cartels for most of the past decade, and had even somehow got involved in buying a private jet that was then left off initial budget reports. Like Aliens v. Predator, whoever wins, we lose, since this is self-justifying behavior, not in the public's interest but to create reasons for their own relevance. Some degree of fraud, waste,and abuse is bound to happen in all bureaucracies, but in America the impact isn't felt evenly. Black and brown parents have to have a second talk with their kids about encounters with the police. Immigrants, documented or not, pay taxes but receive either abbreviated or absolutely no means-t4ested benefits. In spit4e of contributing to the continued survival of social security, they're literally considered second-class citizens subject to indefinite detention. Or, for about a few thousand Americans, you'll experience the exact same because that's about how many Americans get deported a year to god knows where. And there's plenty of indicators showing that mere spending isn't really sufficient to achieve any of the goals we thought we could just throw taxpayer dollars at. HHS has a $2 trillion budget, almost half of that is used in conjunction with medicaid programs and grants, yet, neither party seems particularly happy with the status quo, not to mention that it excludes 20 million or so immigrants. And we have really convinced ourselves that money can cover up expertise and competency. American farmers are seeing their entire year's revenue coming from subsidies due to the trade war this year. For so many communities in this country, it makes perfect sense to wonder where the tax money go, since frankly it's pretty difficult to see sometimes, and what's most visible sometimes is also the most disturbing, egregious, and kafkaesque one can witness in the system. When that's the vector you interact with what your tax dollars pay for, it's perfectly logically consistent to want actual services yet not want to pay for the abuse. And we don't do public infrastructure stuff well anymore anyway. Think how long it took for the 2nd Avenue subway to go up 3 stations.
- vkou 6y ago
  Sorry to burst the tax evasion bubble, but it is pretty easy to stop cryptocurrencies. Just require KYC at points of entry and exit into the ecosystem.
  - Nextgrid 6y ago
    This would still leave cryptocurrencies as a valid currency for the criminal underworld, and the points of entry/exit will become stolen/illegal goods/services. Not taking either side, just pointing out this fact.
    - st1x7 6y ago
      It's only valid for the criminal underworld if eventually there is a way to convert back to a legitimate currency and launder it efficiently.
      - Nextgrid 6y ago
        Stolen goods seem like an efficient enough way, and I can't see theft going away even if you eliminate the "elephant in the room" which is drugs (by either decriminalizing them or hypothetically winning the war on drugs)?
        avianlyric 6y ago
        Theft doesn’t scale that very well. You try laundering $10 million by selling stolen goods at the pub. It’ll take you a while, and I can guarantee that the police are gonna notice. Even then you’re just turning your goods into cash. Which is still difficult to spend when buying high value assets like property. At some point if you’re a criminal that wants to spend their cash, and live in a developed country you need to turn your crypto into clean fiat in a bank account, or prove the crypto didn’t come from illicit sources.
        vkou 6y ago
        If criminals are the only people using cryptocurrencies, it becomes socially trivial to criminalize the possession of software that interacts with cryptocurrencies.
CryptoPunk 6y ago
The Soviet economy had a substantial black market, especially if you include the Blat system of favor-trading [1]. New York today is seeing growth of ostensibly illegal, unlicensed street vendors, in reaction to lockdown restrictions [2]. Government is not efficient, and cannot effectively enforce rules, so cryptocurrency will undoubtedly survive. [1] https://blogs.commons.georgetown.edu/rees-577-fall2016/2016/10/18/the-importance-of-blats-in-soviet-everyday-life/ https://blogs.commons.georgetown.edu/rees-577-fall2016/2016/... [2] https://nypost.com/2020/12/26/mayhem-in-the-streets-illegal-vendors-are-overtaking-nyc/ https://nypost.com/2020/12/26/mayhem-in-the-streets-illegal-...
- gabereiser 6y ago
  I agree with this at the macro level. It’s easy for a government to strong arm an individual into regulation, a small company even. When the markets themselves shift, that’s when government is going to have a hard time regulating. Crypto, good and bad, is here to stay because government is slow to respond to shifts. What’s going to be interesting to see is how this government regulations vs the people’s needs play out. The street vendors are suppling a demand, there’s a need, illegal vending or not.
- logifail 6y ago
  > Government [..] cannot effectively enforce rules Counter-example: pick any one of the (new) rules that are currently being enforced due to C19? Government may not be efficient, but from time to time may just be efficient enough to catch you and/or punish you. Shameless movie quote: "You've got to ask yourself a question: 'do I feel lucky?'"
  - sildur 6y ago
    Paraphrasing another movie quote: "with everyone criminal, no one will be".
    - logifail 6y ago
      > with everyone [..] Hmm, "everyone"? Q: What proportion of Bitcoin holders are actually using as an approximate alternative to fiat currency (regularly purchasing real life stuff using Bitcoin) vs holding and hoping to get rich?
codethief 6y ago
> You can spend a decade developing a provably-anonymous cryptocurrency (which we have indeed now done) Looks like I've been out of the loop. Which cryptocurrency are you referring to?
- dannyw 6y ago
  Monero.
- SCHiM 6y ago
  I think the op referring to monero (XMR).
- koheripbal 6y ago
  Monero (XMR) is the most notable example, but there are other coins that implement the same technology of truly anonymous and untraceable transactions. FinCEN will not change their course. From their perspective, they would rather try to kill or stifle all cryptos than allow illegal activity to be done within that market without an ability to seize assets or trace funds. Right now they have total control over traditional non-cash monetary transaction - and the US gov't specifically has a long reach into the global economy to enforce things like OFAC and sanctions. Cryptocurrency openly defies that power base by design (censorship resistance). There is fundamentally no solution here where the two will play nicely together. Cryptos will simmer in the background as the section of the global economy they facilitate grows (black market transactions), and erode the western financial power base. It's mostly limited today by the lack of scalability in the coin networks. I wonder if there's a future where innovation in scalability allows for a single crypto to reign supreme globally and eliminate all national currencies in our lifetime. It would be a monumental shift of power, which will undoubtedly involve a great deal of political/technological struggle and civil chaos.
  - panarky 6y ago
    Monero priced in Bitcoin is down 60% in the last year and it's down 90% since its peak in 2018. If Monero's purpose is to be anonymous and untraceable, and Bitcoin's purpose is to be a store of value, then it appears the market prefers the store-of-value use case. There's a popular idea that crypto currencies are only good for illegal activity. But the evidence so far from a nearly trillion-dollar market says that avoiding law enforcement is not what's driving the crypto phenomenon. There's another popular idea that central bank money printing is devaluing national currencies when priced in crypto. I'm sure that's part of it, but inflating the money supply by 30% doesn't really justify a 10x increase in crypto valuations. It's a small sample size, but the handful of wealthy families I'm acquainted with who are investing 0.1% to 2% of their net worth into Bitcoin (and a little into Ethereum) are more afraid of a collapse of the western political order than central bank money printing. Institutions and high-net-worth individuals aren't looking for privacy for illicit transactions so they're not putting their wealth into Monero. They've witnessed or researched what the collapse of the USSR did to the ruble and asset prices in the former Soviet Union, and they're buying some insurance against a similar unraveling in the US and Europe.

TheChaplain 6y ago

I believe privacy advocates needs to be more involved in the financial sector for there to be any meaningful change and provide counter proposals to balance. The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. I often get shat on when mentioning that, especially by loud proponents of cryptocurrencies, but it is a real issue that must be resolved. Our old-fashioned bank system is far from perfect but it is harder to do illegal things unnoticed, banks report thousands of cases to authorities every year. Cryptocurrencies is the future, and we should not let our guard down allowing criminal elements to exploit it.

ve55 6y ago
We are happily open to suggestions on ways to stop crime that don't involve collecting any additional data, but I think you'll find it very difficult to come up with systems that satisfy both stakeholders here, as the way I see it they are at a constant impasse.
AnthonyMouse 6y ago
> The problem now is that a lot of cryptocurrencies are prime targets for money laundering The issue is that you can't actually solve this. It's already over. The premise of money laundering rules is that you have two conspiring parties transferring illicit gains between one another and the regulations have the bank as an intermediary informing on them to the government. The existence of cryptocurrency makes it possible to do this without an intermediary party. It has already happened and you can't put the genie back in the bottle. It doesn't matter how you regulate above-board exchanges and transactions in the US because the illicit transaction can occur digitally outside of the sphere of influence of a given country without using any of the intermediaries being subjected to the regulations. What it means is that all the costs of AML and KYC regulations are no longer buying you anything because actual criminals now have an end-run around them, but they're still costing you something, as the law abiding people trying to comply with the rules, for as long as they remain on the books.
- ajkdhcb2 6y ago

etaioinshrdlu 6y ago

You know, I really would have thought that the Trump administration would have represented the "deconstruction of the administrative state": https://www.washingtonpost.com/politics/top-wh-strategist-vows-a-daily-fight-for-deconstruction-of-the-administrative-state/2017/02/23/03f6b8da-f9ea-11e6-bf01-d47f8cf9b643_story.html https://www.washingtonpost.com/politics/top-wh-strategist-vo.... This is the common framework that justifies reducing the activity of the US State Department, generally relinquishing the status of the USA as world police, and a sort of libertarian view of personal liberties. In that framework, you'd think the administration would be very against the government monitoring all financial transactions. Trump himself you'd think would greatly enjoy legally being able to anonymously move any amount of money around. Trump can personally direct FinCEN policy as it's part of the executive branch. Yet here we are, the policy is undistinguishable from the Bush or Obama years. There could have been silver linings for personal liberties to this administration if they actually stuck to the principles they claimed.

stareatgoats 6y ago
This may come as a shocker, but the principles that any politician claim sooner or later tend to crumble when faced with the realities of government. In the case of libertarian principles, what you find is that the core of the principles that survive the governing machine is but to relieve the rich of taxation and other cumbersome regulation. The pretty principles live on in the rhetoric, but any objective onlooker can not avoid perceiving them as hollow to the point of deception.

loraa 6y ago

It's not about crime or laundering. It's all about making sure normal people are paying taxes. The government is a joke.

drtillberg 6y ago

The main real-world uses for bitcoin are (1) evasion of currency controls and (2) facilitation of extortion and fraud. That's all illegal, btw. The surprise is FinCEN didn't act until now to align its surveillance of bitcoin with the rest of the financial world. I also would speculate that the short action timeline and comment period have a typically cynical purpose to deploy one of a grab-bag of regulatory actions at precisely the moment the price of bitcoin has again caused a stir. Bitcoin isn't worth fighting for here, sorry EFF, but it is a useful canary warning about the current state of low financial freedom and privacy (by historical standards) and surprising degrees of unofficial suppression of viable alt-moneys. I would be happily surprised if the FinCEN reg forced unlawful use cases out of the bitcoin ecosystem leaving a vibrant, healthy marketplace....

CryptoPunk 6y ago
>>Bitcoin isn't worth fighting for here, sorry EFF, but it is a useful canary warning about the current state of low financial freedom and privacy (by historical standards) and surprising degrees of unofficial suppression of viable alt-moneys. I would be happily surprised if the FinCEN reg forced unlawful use cases out of the bitcoin ecosystem leaving a vibrant, healthy marketplace.... This is a completely incoherent paragraph. In the first half you bemoan the lack of financial privacy and freedom, and in the second cheer on privacy-violating and freedom-suppressing FinCEN regulations.
- drtillberg 6y ago
  Let me simplify it. The bitcoin ecosystem is a cesspool of ransomware payoffs, international money laundering and speculation. Eliminate 2 of those use cases via financial surveillance and I will be happily surprised if the 3d survives, or if any similarly robust marketplace springs up from the ashes. Because the bitcoin ecosystem is such a mess, it's not worth saving, in my opinion. It's a feature, not a bug, and it gives all alt-moneys a bad reputation. I don't like dragnet-style financial surveillance, in general. If it bothers you when applied to bitcoin for philosophical reasons, it should bother you more when applied to other alt-moneys with less nefarious uses.

hal-9-000 6y ago

The way I see it: Governments have already lost the battle with decentralized tech stacks - the ship has sailed. They can propose and push just about any regulation. They can start whitelisting/kyc Bitcoin wallets, trace transactions and whatnot, but almost all valuable protocols for p2p transacting are open sourced and we can always run a new blockchain network under the radar. The ability to own a locally generated key pair in such a network and, under the assumption that one already owns some assets tied to that specific network, one can freely transact and interact with other parties safely - is something that can never be regulated. While I'm transacting within boundaries of such a p2p network (i.e. not exiting to fiat) I should be safe. Needless to say that I'm expecting even more of the blockchain development going in these directions to make network resistant to government's regulatory attacks.

markkat 6y ago

We should not sacrifice privacy to make law enforcement easier. It's ok to make law enforcement work harder and less efficiently rather than the people they serve.

Supermancho 6y ago
I don't see how this is about "privacy". How are you defining that? I'm not even sure why anyone would cant to consider money exchanges "private". You want currency exchanges to be recorded for auditing, at the very least. The idea of invisible transaction causes and allows more harm than good. Fiat barter is always an option if you want to avoid a ledger.
- markkat 6y ago
  n. The quality or condition of being secluded from the presence or view of others. n. The state of being free from public attention or unsanctioned intrusion.

todipa 6y ago

I would argue that these new regulations are in a way a breach of the Fourth Amendment, which is supposed to protect people from unreasonable searches. This seems like a search to me...

lucasnortj 6y ago

Crypto “currencies” are used by two kinds of people. Fools and criminals. It would be trivially easy for governments to prohibit their purchase and they should do so