Author: Aleksandar Kokotović

How Argentinians Are Using Crypto To Fight Inflation

As the country’s statistics agency announced, Argentina’s annual inflation rate is now officially in the triple digits, reaching 102.5%, with a 6.6% monthly rise in the Consumer Price Index (CPI), and a 13.1% year-to-date increase. This is the largest inflation recorded in the country since 1991. When inflation is that high, prices can change very quickly, sometimes even on a weekly basis.

Economic instability and high inflation are not new to citizens of Argentina. The country experienced a  ‘Golden Age’ in the late 19th and early 20th century which saw it  industrialize, become one of the world’s leading exporters of wheat, beef, and wool and one of the preferred places for people to immigrate to due to its economy and opportunities. Sadly,the country never completely recovered from the Great Depression of the 1930s. Periods of intense political instability, dictatorships and redistribution of wealth caused numerous economic setbacks. After its return to democracy in the 1980s, the government, led by President Carlos Menem, implemented a series of economic reforms, known as the “Convertibility Plan”, that  aimed to stabilize the economy and reduce inflation. However, the government continued to run large budget deficits and accumulate debt, which together with external shocks further weakened the economy. After inflation rates reached more than 3,000%, one of the highest recorded in history, a series of reforms allowed for it to stabilize. 1991 was the last year Argentina saw triple digit inflation rates until now.

It should not be surprising that many in this country are accustomed to ‘thinking in US dollars’, allowing them to more easily and clearly calculate and understand price signals from the market. It is exactly that sort of economic situation that makes Bitcoin, Ethereum and stablecoins such an important tool for storing value, receiving remittances and partly avoiding inflationary pressures. Many of these concerns are exemplified by the popularity of stablecoins in Argentina. According to the Chainalysis report, almost a third of crypto transaction volume comes from stablecoins. Besides not being subjected to purchase limits (200$ is the maximum amount regular Argentinians can convert to USD a month), stablecoins are pegged to the US dollar, the preferred currency to think about prices in the country. It also helps that cryptocurrencies are digital and not dependent on any local bank in a country where more than one in three unbanked adults cited distrust in the financial system as one of the reasons for not having an account, according to a World Bank report. In a country where more than a third of the population is underbanked or unbanked and internet access is broad, the needs for inflation resistant currency such as Bitcoin, products for financial services allowed by decentralized finance and stablecoins to store value are obvious. 

In a week where the Argentine Peso reached triple figure inflation, it is impossible to overstate the importance of technologies allowing for people from all around the globe to safeguard their funds from political and economic instability. The fact that the citizens of this beautiful country have had the chance to live in periods of hyperinflation, decades of economic instability and uncertainty has also made them more aware of the choices and technology that can help them store their wealth and their paychecks safely. 

Times of hyperinflation are extremely difficult and detrimental to one’s financial well-being and the opportunity to provide for their families. It is a time when black market exchanges bloom, costs of even the most common groceries change weekly and a salary might be worth less in the evening than it was when it landed in your bank account. In such situations, it can be of life importance to be able to store value and receive remittances in a currency that is strong enough to make sure your wealth doesn’t melt away. DeFi, Bitcoin and stablecoins are allowing this to happen and millions of Argentine citizens are benefiting.

Why did the SEC send a Wells notice to Coinbase?

The Securities and Exchange Commission sent a Wells notice to Coinbase yesterday, offering Coinbase to submit information on Coinbase’s listed digital assets, as well as Coinbase Earn, Coinbase Prime and Coinbase Wallet. 

The Wells Notice is named after the Wells Committee, formed in 1972, and named after John Wells who served as SEC advisory committee chair. According to the SEC’s Enforcement Manual, a Wells notice is a communication from the staff to a person involved in an investigation that: (1) informs the person the staff has made a preliminary determination to recommend that the Commission file an action or institute a proceeding against them; (2) identifies the securities law violations that the staff has preliminarily determined to include in the recommendation; and (3) provides notice that the person may make a submission to the Division and the Commission concerning the proposed recommendation. 

In simpler terms, this means that the SEC is notifying Coinbase of upcoming enforcement actions.

Following the announcement of SEC action, Coinbase CEO Brian Armstrong posted a thread explaining the relationship between his company and the regulators and announced the company will contest any enforcement in court. 

In addition, the Chief Legal Officer of Coinbase, Paul Grewal expressed disappointment with the fact that the SEC is considering courts over constructive dialogue. In a separate thread, Grewal explained that Coinbase has met with SEC over 30 times over the past 9 months, sent a petition asking for more regulatory clarity to which it did not receive any response nor any valuable feedback on what to change. 

He goes on to compare a number of other jurisdictions where Coinbase successfully jumped over the regulatory hurdles and became a licensed and regulated crypto business, including Australia, Singapore and Germany. Coinbase has also managed to obtain DCM and DCO licenses from CFTC.

Additional confusion is caused by the fact that the SEC declined to identify which assets offered on Coinbase they deem to be securities. This is concerning as Coinbase claims to have a rigorous review process where more than 90% of tokens asking to be listed end up being declined because they fail to meet the standards and requirements to be traded on the platform. 

When it comes to the staking service Coinbase offers, the company has presented it to the regulators from the SEC in 2019 and two times during 2020 and received no complaints until now. 

A Wells submission regarding the Coinbase Wallet is especially dumbfounding as the wallet is a technological tool rather than a platform or an exchange and it goes to further illustrate the deep misunderstanding of crypto products by the regulators. 

The SEC sending a Wells notice to one of the most compliant crypto companies, together with the past couple of months of actions of Fed, FDIC, and OCC, is another example of the regulatory pressures through enforcement that the current administration is undertaking against law abiding crypto actors in this space. 

A number of coordinated efforts in the past few months have appeared, visible and obvious enough that they are being dubbed Operation Choke Point 2.0. Bank accounts being closed, with no notice and explanation, leading to unbanking of crypto companies together with actions of SEC are another example of the current administration’s attempts to regulate crypto through enforcement.

This and similar examples showcase the aversion that regulators have to crypto companies, users and the sector as a whole. Whilst many industry actors have insisted on regulatory clarity and cooperation, the agencies and regulators have been adding fuel to regulatory uncertainty in the United States. Not only has this been bad for the industry and retail consumers of crypto related products but has been further contributing to the uncertainty that exists in the sector. This approach has been hurtful to the companies, talent and consumers and is going to further drive innovation and jobs to jurisdictions more open and capable of hosting and prospering from this emerging industry. 

As a consumer advocacy group that champions innovative technology and smart policies, the Consumer Choice Center has published its State Model Policy to provide state and local legislators with a template of consumer-friendly policy on Bitcoin, cryptocurrencies, and decentralized finance. 

One in 5 adults in the US owns crypto and having these consumers use services hosted in other countries will make them less safe and more susceptible to many negative externalities that could be avoided by having clear and functional regulation in their home country. 

Only by introducing regulatory clarity, avoiding regulation by enforcement and communication with law abiding companies in the crypto space can the US make sure that businesses and talent are staying in the country rather than fleeing overseas where innovation will be more appreciated. 

Aleksandar Kokotović is the crypto fellow at the Consumer Choice Center.

The Great Danger of CBDCs

Kaleidoscopic Banknotes Collage

There have been numerous announcements of central banks starting to explore the idea of introducing Central Bank Digital Currencies (CBDC).

From e-naira, a CBDC issued by the central bank of Nigeria, to the digital yuan in China to the European central bank exploring the idea of the digital euro. In fact, according to the Bank For International Settlements research, 90% out of 81 central banks surveyed have been in some shape or form investigating the idea of introducing a central bank digital currency.

According to the same survey, an increasing number of countries are adjusting the legal authority of central banks giving them provisions that allow for a launch of digital currencies.

These central banks argue that CBDCs will help with financial inclusion by providing more access to financial services for underbanked and unbanked, they would lead to a significant reduction in fraud and money laundering, and they would improve efficiency and ultimately allow for a better and more efficient monetary policy through more control over the money supply.

CBDCs are often thought of in terms of the government’s response to crypto, the way that central banks are trying to get with the times and digitize money. However, except for utilizing similar technologies, they are fundamentally different from Bitcoin and many other cryptocurrencies.

The most significant difference between CBDCs and Bitcoin lies in the level of centralization and control. While Bitcoin is a fully decentralized currency operating on a decentralized ledger that not one person or organization can control, CBDCs are issued and fully controlled by the central bank that controls its supply, issuances, and use.

Bitcoin was created as a decentralized alternative to traditional fiat currencies and as a response to the monetary policies of central banks creating uncertainty and being responsible for the devaluation of money with ripple effects throughout the economy. CBDCs would equip governments with tools providing fast and easy total control over monetary policy to the extent of targeting businesses, organizations, and individuals. 

The level of control that a government would have over every transaction and the ability to apply transaction censorship over anyone would give leaders a level of control unprecedented in history, a tool that any totalitarian leader from a few decades ago could have only dreamed of. 

One could argue that most money already is digital, an endless collection of 0s and 1s. However, the crucial distinction is that no single database can track and oversee every transaction that exists. There are a number of laws and regulations in place that allow law enforcement to request access to records of interest where courts are required to give approval for such actions.

Forgoing these checks and balances currently in place and allowing one-click access to accounts of citizens would give not only an unprecedented power in terms of privacy violations but also an opportunity to monitor or deactivate undesirable accounts based on any perceived or real violation.

Taking away all of one’s ability to sustain themselves by locking their accounts is equivalent to jailing them. Giving officials the option to freeze or ban certain accounts without due process could seriously damage the principles of rule of law on which our society rests.

The potential for any elected or appointed officials to affect a citizen’s livelihood in such a way could lead to serious consequences, such as endangering the ability of citizens to use their right to free expression in fear of their lives being ruined in a single click. It is not hard to imagine many possible ways that any malicious actor could use this centralized power. Many other unintended consequences could be possible and some could create immense levels of social distrust.

Then there is privacy. Transactions made using CBDCs may be recorded on a public blockchain, making it possible for others to track and analyze financial data. Having citizens using a tool that could fundamentally affect their privacy on an unimaginable scale thus far in human history would be a grand violation of rights to privacy and would, without a doubt, lead to additional problems.

You thought your browsing history could be turned against you? Anyone having access to any monetary transaction you have made would definitely not be fun either and it is easy to imagine dozens of ways that bad actors could exploit access to that kind of information.

Another often overlooked potential consequence of introducing Central Bank Digital Currency is the digital monetary competition. If we see a rise in digital currencies issued by central banks, it is likely that they will enter a race with other country issued currencies as well as private or decentralized ones, such as Bitcoin. Having this sort of competition would potentially open up unknowing citizens to currency fluctuations which cannot be foreseen and create even larger instability with some national currencies. The ways this could affect purchasing power and lead to potential civil unrest is evident.

This is only a few ways that adoption of Central Bank Digital Currencies could affect life as we know it. It is easy to see how an extremely centralized, highly controlled and surveilled currency would be an end of many of the freedoms that our societies enjoy and shows why in contrast, Bitcoin, a highly decentralized, secure and censorship resistant currency is immensely important and represents one of the most potent tools humanity has today.

Aleksandar Kokotović is the crypto fellow at the Consumer Choice Center.

Europe’s comprehensive crypto legislation is being adopted. Here’s what you need to know.

The European Union’s Markets in Crypto Assets Regulation (MiCA), a legislation that aims to “harmonize the European framework for the issuance and trading of various types of crypto tokens as part of Europe’s Digital Finance Strategy,” which has been in the works for years, is finally ready. It has caused plenty of discussions, some controversy and has been feared — but also welcomed — by the crypto industry. Let us look into the process that led us here, what is still to come, and why this piece of legislation might be one of the most significant and comprehensive that we have seen in crypto yet.

MiCA, which will be applicable across all the member states in the European Union as well as with all businesses operating in the EU, has been in the works since early 2018. It first came into discussion following the bull market of 2017, a heady time where Bitcoin was making its new highs, a thousand tokens started flourishing amid Initial Coin Offerings (ICOs) out of which more than half failed less than 4 months after the offering. 

The European Commission published its Fintech Action Plan in March 2018 and gave the mandate to the European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) to review if the existing EU financial services regulatory framework applied to crypto assets. After deciding that most crypto assets are outside of the scope of current financial regulations, regulators began working on a new framework under the Digital Finance Package which eventually became MiCA. Since its initial inception, the crypto market went through a bear market, reaching its bottom in the early days of the pandemic followed by another bull market before taking a downward trend again in late 2021. New regulatory fears were ignited in the first two quarters of 2022 followed by events such as the Terra Luna stablecoin collapse and Three Arrows Capital and Celsisus bankruptcies. 

In such a fast-paced environment, it is not difficult to understand that MiCA’s scope had to evolve from its original conception. NFTs barely existed when the legislation was first being conceived, DeFi summer was nowhere in sight and Meta was still called Facebook and working on its much scorned Libra project (remember that one?). Creating a legal framework that would provide legal certainty for both investors and issuers in that sort of fast pace environment was not easy, and the regulators have been back to the drawing board a few times. What we have in front of us now will be the largest piece of legislation around crypto thus far. 

One of the major rules that will affect the industry is the requirements set for Crypto Asset Service Providers (CASPs) and investment firms and anyone providing custodial services. They will be liable for any loss of customer funds unless they are able to prove it was a result of events beyond their control. A number of measures deal with preventing insider trading and market manipulation. 

In the process of formulating MiCA, a number of heated discussions were held on proof-of-work, so called ‘mining’, and potential environmental effects of this practice. Even with significant pressure coming from certain groups, the legislators rightfully steered away from any potential bans on proof-of-work. However, actors in the crypto market will be required to declare information on their climate footprint. 

When it comes to decentralized financial protocols, they are not in the scope of MiCA and the European Commission will be publishing a separate report on them in 2023.

A large concern and a great deal of debate during the process of writing MiCA was focused on stablecoins. Following concerns expressed by the Council, additional restrictions on the issuance and use of stablecoins have been added to the legislation. Notably, MiCA has expressed the view that stablecoins could pose a threat to monetary sovereignty and opined that “central banks should be able to request the competent authority to withdraw the authorisation to issue asset-referenced tokens in the case of serious threats”. 

Asset referenced tokens (ARTs) as noted in the legislation should be redeemable at purchased price at all times, which more or less makes any non-fiat denominated stablecoins not viable to launch, making it almost impossible for innovation in that field to take place and stripping away European consumers from participating in such potential investments. Together with issuance caps and limits on large scale payments for non-euro denominated stablecoins, this creates a confusing and not consumer-friendly environment when it comes to these tokens.

Even with all the updates and desire to keep up with the developments in the crypto industry, MiCA does not cover some very important parts of the crypto economy today. NFTs are mostly outside of the scope of this legislation. However, EU parliament members argued that many NFTs are actually used as financial instruments and could be subject to different standards. Fractionalized NFTs on the other hand, as well as “non-fungible tokens in a large series

or collection should be considered as an indicator of their fungibility” and will be treated not as unique crypto assets similar to digital art or collectibles. 

The assets or rights represented by the NFT should also be unique and non-fungible for the asset to be considered as such. The fact that national enforcers could take inconsistent views on whether an asset can be considered non-fungible or not, if it requires a whitepaper or how exactly will it be regulated is something that should be of concern as it could potentially create many inconsistencies and concerns both for issuers and consumers. The EU is expected to publish another report on NFTs bringing more clarity to this area.

After the linguists are done with the final version of the text, the expectations are that MiCA will appear in the official journal sometime around April 2023, which would mean that stablecoin rules will start applying in April 2024 and CASP rules will be applied starting from October 2024. Considering the European Union is the third largest world economy, the effects of this legislation will have a broad impact on the industry, on retail consumers and investors, and definitely have some swway on other regulators around the world.

Having the European Union on the forefront of regulation of tech innovation is something that we have not seen much in the past. With MiCA being adopted, it will be up to the industry and consumers to make sure that the measures introduce certainty and allow for more innovation to flourish. Also, if those priorities stick, that these measures are copied and applied elsewhere. Either way, a long and exciting journey is ahead for everyone — regulators, investors and the broader crypto community.

EU’s Bitcoin and Cryptocurrency Surveillance Rules to Harm Consumers

The European Union’s final trialogue between Council, Commission, and Parliament has finished crafting the first part of legislation that makes up the new EU anti-money laundering package aligned with the Markets in Crypto-assets rules (MiCA).

These rules are drafted following recommendations from the so-called Travel Rule of the Financial Action Task Force (FATF), a global treaty organization that combats money laundering. The aim of this rule is to effectively track financial assets, and included crypto assets like Bitcoin and other cryptocurrencies beginning in 2019,

The EU’s proposed rules introduce regulations that are far from technologically neutral, are detrimental to innovation, and will harm consumers who depend on cryptocurrency services.

Crypto asset service providers are obliged to keep records and provide traceability from the first euro compared to traditional finance where that requirement is set for transfers larger than 1000 EUR.

Crypto asset service providers will be required to collect information and apply enhanced due diligence measures with respect to all transfers involving non-custodial wallets. A number of risk-mitigation measures will be in place for cryptocurrency exchanges before establishing a business relationship with exchanges in third countries. 

Putting such stringent regulations on non-custodial wallets, together with introducing strict and complicated measures for cryptocurrency exchanges, will introduce unfavorable conditions for the growing industry and will cause a number of businesses to be forced and move their operations abroad – depriving consumers of their ability to safely and securely enjoy crypto services.

Putting these high regulatory costs in place is already influencing the decision-making of crypto asset service providers, now considering changing jurisdictions and moving to more favorable ones. These ham-handed regulations won’t only affect the industry, but many of the consumers who rely on them, pushing them to use non-EU exchanges. 

We have seen consumers voting with their feet in the past, choosing service providers in different countries to avoid similar measures, and this will be no exception.

With more Orwellian stipulations requiring that a consumer who sends or receives more than 1000 EUR to or from their own non-custodial wallet be verified by the crypto exchange, we will be seeing a number of issues arising both for the industry as well as for the consumers, putting additional costs to all transfers. 

The European Union has been criticized in the past for its overregulation especially when it comes to innovative technologies. Even though the EU has been relatively early in creating a comprehensive legal framework for cryptocurrencies, a number of the regulations agreed on will undoubtedly bring harm to both the industry and the retail consumer.

Surveillance of each consumer coupled with copious regulations aimed at crypto asset service providers will once again leave EU citizens looking for alternatives within jurisdictions more open to innovation, decentralization, and consumer-orientated regulatory frameworks.

The entire point of cryptocurrencies is to provide an alternative to the government-controlled fiat money system. These rules aim to disrupt that aim, principally by forcing industry players to comply with even stricter rules imposed on traditional finance institutions.

There is a better way to do this in order to promote innovation, protect consumers, and create a better ecosystem that will benefit all Europeans.

Our Principles for Smart Cryptocurrency Regulations policy primer is available to all regulators, and offers core principles to uphold in order to create regulatory guidance for the nascent industry without hurting innovation.


  • Prevent Fraud
  • Technological Neutrality
  • Reasonable Taxation
  • Legal Certainty & Transparency

The temptation to regulate cryptocurrencies and the blockchain economy based on financial considerations alone, rather than the innovative potential, is an active threat to entrepreneurs and consumers in the crypto space.

Penalizing first-movers in crypto innovation or subjecting them to outdated laws will only serve to limit the unparalleled economic growth currently provided by the sector, or risk pushing all investment and entrepreneurship to less reliable and lawful jurisdictions.

The policy primer can be read in full here

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

If you would like to help us defeat harmful Bitcoin and cryptocurrency regulation, also using crypto, consider investing value in the Consumer Choice Center via our Donate page.

New Yorkers need prudence, not bans, on Bitcoin and cryptocurrency mining

On May 24, 2022, the Consumer Choice Center sent a letter to New York state lawmakers, warning of the potential consequences to consumers if bill S6486D was adopted, a moratorium on Bitcoin and cryptocurrency mining.

The full letter is available below, or in PDF version here.

Dear Senators,

We write to you to urge you to vote against S6486D, a companion bill to A7389C, which would order a state-wide moratorium on cryptocurrency generation or mining.

If passed, this bill would be a death blow to the Bitcoin and cryptocurrency industry, resulting in thousands of jobs lost in New York, a loss of capital to scale up renewable energy, and would harm all potential benefits to consumers from cryptocurrency projects and initiatives. 

The aim of embracing climate goals to ensure 100% renewable energy usage in cryptocurrency generation and mining is well-intended, but a complete ban will have a devastating impact on innovators and entrepreneurs hosting their facilities in the state of New York, and consumers and investors that rely on their services.

As a consumer group, it may seem odd for us to weigh in on a topic that affects mostly industry players and firms. However, because we believe that Bitcoin, and cryptocurrencies more broadly, will serve a vital role in making finance and economics more inclusive and accessible for sending, receiving, and saving value, we hold it in the interest of consumers that the hashrate (the total computing power of the network) continue to grow, and that better public policy on cryptocurrencies is embraced among state legislatures.

If the Bitcoin hashrate grows specifically in the United States, then we will have more control in how mining develops and how it can benefit the country, its citizens, and our energy grids.. This last part is vital for climate goals, which cannot be said for China or other nations.

According to the latest figures from the first quarter of 2022 on Bitcoin mining specifically, 58.4% of miners are using renewable energy sources, and that number has only increased in several years. In New York, many firms are retooling abandoned processing and power generation plants to build cryptocurrency data centers, and are providing economic value in return that is putting renewable energy to work.

What’s more, this wide-ranging energy diversification is happening at a pace faster than any other industry, leading to more investment in renewable energy capacities and delivery systems. This increased demand is leading to more environmentally favorable energy delivery for customers of all public electricity utilities, and will also help bring down costs. And this is being carried out due to the incentives of firms and individuals who participate in adding hash rate to mining: they want to lower their costs and find better alternatives. 

Cryptocurrency generation and mining firms have an incentive to use the most affordable and renewable energy sources available, and the data backs up this claim. This is a win-win scenario for towns and localities with these facilities, for employees of these firms, residents in these towns that benefit from increased commerce, and energy customers overall.

As cryptocurrency mining has proliferated in New York, it has opened up new entrepreneurial activities that will help improve the lives of New Yorkers in small communities and large urban centers alike. Entertaining a ban on these activities, in pursuit of an unclear climate goal, will negate these gains. There is a better path.

It should not surprise you to know that New York’s previous policy decisions, including the highly criticized BitLicense, have locked many New Yorkers out of the new cryptocurrency ecosystem due to the high compliance costs. Some New Yorkers have chosen to change residences in order to acquire cryptocurrency or to invest in crypto businesses, which they can do in any other state, but more specifically Texas, Wyoming, and Florida.

If this moratorium on cryptocurrency generation comes to pass, it will be yet another signal to entrepreneurs and consumers that Bitcoin and other cryptocurrencies are not welcomed in New York, and the regulatory framework is too unfavorable to justify investing here.

A number of industry organizations, communities, and unions have already expressed their concerns about the impact this bill would have on their families and livelihoods, fearing potential job loss in case industry gets driven away from the state as a result of this legislation. The loss of future investments and new jobs is another concern expressed by many communities in cities such as Rochester, Albany, and Syracuse.

According to the May 2022 Empire State Manufacturing Survey, the general business conditions index has dropped thirty-six points statewide. The last thing many affected and marginalized communities need is a moratorium that would drive businesses away from the state, and keep millions of New Yorkers from being included in a new system of value.

We understand that the quick rise of cryptocurrency mining raises many questions for residents, particularly when it involves the local economy and environment. However, a more prudent path would be an environmental review conducted by relevant authorities, rather than a wholesale ban and moratorium that would put many projects in legal jeopardy.

As consumer advocates, we are strongly opposed to this bill. We believe that New York residents deserve a chance to take part in the nascent industry that so many other states are hoping to accommodate. Using the force of regulation to drive away investments and jobs, stop economic progress, and shut out millions of New Yorkers from a more inclusive financial system would not only be wrong, but it would also be negligent.

Please vote No on S6486D aiming to place a moratorium on proof-of-work and help New York become a hub of innovation that embraces new technologies. New Yorkers should have the opportunity to participate in one of the biggest innovations of our age. With your vote against this bill and a more prudent direction, we can ensure that will happen.

Sincerely Yours,

Yaël Ossowski

Deputy Director

Aleksandar Kokotovic

Crypto Fellow

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