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What people don’t understand, even intellectuals like the author, is that money transmission is heavily regulated in the United States. This fact is why cryptoc

What people don’t understand, even intellectuals like the author, is that money transmission is heavily regulated in the United States. This fact is why cryptocurrencies have such a seemingly difficult time finding grounding to the marketplace. It’s not transaction times or energy usage. It’s the BSA Travel Rule, it’s KYC, AML, OFAC, and a regulatory minefield designed to maximize the government’s ability to track and curtail financial flows.

civilized 5y ago
If crypto's only advantage over the traditional finance sector is doing an end-run around regulations, it's no surprise that this advantage won't be sustainable.
- politician 5y ago
  No one in the business of connecting the US Dollar market to the cryptocurrency domain wants to “do an end-run” around any regulations. That’s a bad take. In the compliance space, people don’t “move fast and break stuff”.
  - Nasrudith 5y ago
    Look at all of the fraudulent ICOs out there which replayed financial fraud history. The question is practically "are there any ICOs which aren't scams?".
abeppu 5y ago
> This fact is why cryptocurrencies have such a seemingly difficult time finding grounding to the marketplace. It’s not transaction times or energy usage. Don't you think it's overly simplistic to claim there's only one reason? Transaction times (or ETH gas costs or whatever) have made them infeasible to use in a bunch of cases. But isn't part of it also that every fiat currency has a baked in demand, in that if you don't pay your taxes in that currency you go to jail? As a US citizen, even if every business I frequent accepted BTC, I would still need USD. Using cryptocurrencies by contrast is entirely optional. And to the degree that you believe in the usefulness of cryptocurrencies, would you really spend it on a regular basis?
- politician 5y ago
  Look, you don’t need to trust or believe me, but every major country central bank is evaluating switching to cryptocurrencies and real-time instant payment settlement systems. Google keywords “Central Bank Digital Currency”. Central Banks, FIs, and FinTechs are hyper aware of the value of distributed ledgers.
  - acdha 5y ago
    I think you’re right but that comes from mixing a couple of distinct concepts: most blockchain fans class distributed ledgers as a separate category because they don’t need anonymity and the expense of proof-of-work mechanisms. I’d be unsurprised if whatever the next round of modernization ends up being is called a blockchain for marketing reasons (unless the big consulting firms have moved on by then) but ends up being a far more conventional ledger system because they have existing trust relationships and don’t even want anonymity.
  - hakfoo 5y ago
    Are they valuing a distributed ledger, or are the various CBDC projects more of a faster-horses answer for ACH? A significant part of the need for distributed systems goes away when you're no longer trying to be trustless, and much of the role of a central bank is to be a central anchor of trust. They can run the whole damn ledger, and there's a solid case for doing so being part of a modern financial system. The more sinister factor I could see is that bad actors like distributed systems because they represent a workaround for KYC/AML/capital control regulations. If Chase allows an account opened by $boogeyman_of_the_week, heads will roll. There's nobody that can be readily sued or intimidated to encourage a decentralized network into excluding a participant.
  - pgwhalen 5y ago
    CBDC’s are anything but cryptocurrencies. This is a major misunderstanding of why central banks are pursuing them.
    - politician 5y ago
lwansbrough 5y ago
Uhh, right? The FBI isn’t going to suddenly give up on fraud investigations and the IRS isn’t going to disappear if Bitcoin were to replace USD. You still have to follow the laws or you go to jail.

civilized 5y ago

If crypto's only advantage over the traditional finance sector is doing an end-run around regulations, it's no surprise that this advantage won't be sustainable.

politician 5y ago
No one in the business of connecting the US Dollar market to the cryptocurrency domain wants to “do an end-run” around any regulations. That’s a bad take. In the compliance space, people don’t “move fast and break stuff”.
- Nasrudith 5y ago
  Look at all of the fraudulent ICOs out there which replayed financial fraud history. The question is practically "are there any ICOs which aren't scams?".

abeppu 5y ago

> This fact is why cryptocurrencies have such a seemingly difficult time finding grounding to the marketplace. It’s not transaction times or energy usage. Don't you think it's overly simplistic to claim there's only one reason? Transaction times (or ETH gas costs or whatever) have made them infeasible to use in a bunch of cases. But isn't part of it also that every fiat currency has a baked in demand, in that if you don't pay your taxes in that currency you go to jail? As a US citizen, even if every business I frequent accepted BTC, I would still need USD. Using cryptocurrencies by contrast is entirely optional. And to the degree that you believe in the usefulness of cryptocurrencies, would you really spend it on a regular basis?

politician 5y ago
Look, you don’t need to trust or believe me, but every major country central bank is evaluating switching to cryptocurrencies and real-time instant payment settlement systems. Google keywords “Central Bank Digital Currency”. Central Banks, FIs, and FinTechs are hyper aware of the value of distributed ledgers.
- acdha 5y ago
  I think you’re right but that comes from mixing a couple of distinct concepts: most blockchain fans class distributed ledgers as a separate category because they don’t need anonymity and the expense of proof-of-work mechanisms. I’d be unsurprised if whatever the next round of modernization ends up being is called a blockchain for marketing reasons (unless the big consulting firms have moved on by then) but ends up being a far more conventional ledger system because they have existing trust relationships and don’t even want anonymity.
- hakfoo 5y ago
  Are they valuing a distributed ledger, or are the various CBDC projects more of a faster-horses answer for ACH? A significant part of the need for distributed systems goes away when you're no longer trying to be trustless, and much of the role of a central bank is to be a central anchor of trust. They can run the whole damn ledger, and there's a solid case for doing so being part of a modern financial system. The more sinister factor I could see is that bad actors like distributed systems because they represent a workaround for KYC/AML/capital control regulations. If Chase allows an account opened by $boogeyman_of_the_week, heads will roll. There's nobody that can be readily sued or intimidated to encourage a decentralized network into excluding a participant.
- pgwhalen 5y ago
  CBDC’s are anything but cryptocurrencies. This is a major misunderstanding of why central banks are pursuing them.
  - politician 5y ago

lwansbrough 5y ago

Uhh, right? The FBI isn’t going to suddenly give up on fraud investigations and the IRS isn’t going to disappear if Bitcoin were to replace USD. You still have to follow the laws or you go to jail.