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I agree that central exchanges should be regulated, and in the US they are. If the US can get foreign exchanges to behave, so much the better. The issue is cla

I agree that central exchanges should be regulated, and in the US they are. If the US can get foreign exchanges to behave, so much the better. The issue is classifying an individual running a small miner/validator in their bedroom as a money service business (Sec 3(a) in the bill), requiring them to do the impossible by collecting KYC on whatever transactions cross the network.

lordfrito 4y ago
KYC is indeed burdensome. But laws on money laundering being what they are, you can't claim ignorance. There's a minimum standard to be met when handling money in aggregate. If you don't know your customer, how do you know you aren't part of the problem? Criminal organizations are great at hiding finances by exploiting loopholes at scale, and unregulated crypto is one hell of a loophole. The laws are setup to get everyone up and down the criminal chain-of-command, guilt by association. It's a good thing that criminals have a hard time finding financial institutions that will take their ill-gotten gains. Unfortunately there is no semi-safe DMZ between highly-regulated and unregulated finance. It's pretty much binary. Regulated finance continues to grow until it touches everything legit, everything else gravitates to shadow overseas/back-alley finance.
- DennisP 4y ago
  It's not "burdensome," it's impossible, because they are not businesses handling money for customers, they're regular people running an internet protocol. They don't, for example, ever take custody of anyone else's money. Requiring KYC of businesses who do take custody of other people's money is something we do already, even in crypto.
danaris 4y ago
If you've constructed your financial system such that it relies on individuals running small miners/validators in their bedroom as integral parts of the system... ...then they get to be regulated as part of a financial system. Because that's what they are. You don't get to evade regulations just by going, "but, but, but, think of the poor individual who just wants to run a tiny little miner!" when that individual is, in however small a way, directly contributing to a system that, in practice, exists primarily to enable fraud and money laundering.
- kodyo 4y ago
  Arrest people for fraud and theft, then. The medium through which their transactions flow isn't the problem.
  - danaris 4y ago
    When you create a medium that invites fraud and theft, and it isn't regulated properly, there's too much crime to expect the proper authorities to be able to handle in a timely manner. If regulating the new medium the same ways as the old medium, for the same reasons, destroys the value proposition of the new medium...then the value proposition was only ever evading regulation to start with. That is to say, crime.
    - kodyo 4y ago
      If the medium was created to avoid specific risks that are introduced by "proper authorities" for the depraved benefit those authorities, then asking for the proper authorities to cripple that medium invites further depravity from the authorities. If theft and fraud are rampant within a certain medium, people will learn to use it in ways that they can't be defrauded or robbed from, or it will whither on its own.

lordfrito 4y ago

KYC is indeed burdensome. But laws on money laundering being what they are, you can't claim ignorance. There's a minimum standard to be met when handling money in aggregate. If you don't know your customer, how do you know you aren't part of the problem? Criminal organizations are great at hiding finances by exploiting loopholes at scale, and unregulated crypto is one hell of a loophole. The laws are setup to get everyone up and down the criminal chain-of-command, guilt by association. It's a good thing that criminals have a hard time finding financial institutions that will take their ill-gotten gains. Unfortunately there is no semi-safe DMZ between highly-regulated and unregulated finance. It's pretty much binary. Regulated finance continues to grow until it touches everything legit, everything else gravitates to shadow overseas/back-alley finance.

DennisP 4y ago
It's not "burdensome," it's impossible, because they are not businesses handling money for customers, they're regular people running an internet protocol. They don't, for example, ever take custody of anyone else's money. Requiring KYC of businesses who do take custody of other people's money is something we do already, even in crypto.

danaris 4y ago

If you've constructed your financial system such that it relies on individuals running small miners/validators in their bedroom as integral parts of the system... ...then they get to be regulated as part of a financial system. Because that's what they are. You don't get to evade regulations just by going, "but, but, but, think of the poor individual who just wants to run a tiny little miner!" when that individual is, in however small a way, directly contributing to a system that, in practice, exists primarily to enable fraud and money laundering.

kodyo 4y ago
Arrest people for fraud and theft, then. The medium through which their transactions flow isn't the problem.
- danaris 4y ago
  When you create a medium that invites fraud and theft, and it isn't regulated properly, there's too much crime to expect the proper authorities to be able to handle in a timely manner. If regulating the new medium the same ways as the old medium, for the same reasons, destroys the value proposition of the new medium...then the value proposition was only ever evading regulation to start with. That is to say, crime.
  - kodyo 4y ago
    If the medium was created to avoid specific risks that are introduced by "proper authorities" for the depraved benefit those authorities, then asking for the proper authorities to cripple that medium invites further depravity from the authorities. If theft and fraud are rampant within a certain medium, people will learn to use it in ways that they can't be defrauded or robbed from, or it will whither on its own.