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The Counterfactual: What role do ENDS play in smoking cessation?

Republished from Clivebates.com with the consent of the author

To date, evidence on the use of ENDS as a cessation aid is inconclusive. In part due to the diversity of ENDS products and the low certainty surrounding many studies, the potential for ENDS to play a role as a population-level tobacco cessation intervention is unclear.

The evidence actually supports significant effects on smoking cessation. The evidence is only unclear if you insist on looking away from it or imposing a far higher standard of certainty than on any other tobacco control measure. All evidence is unclear to some degree, but evidence from multiple sources triangulates to strongly suggest that vaping assists with smoking cessation and that e-cigarettes function as economic substitutes for cigarettes. This is exactly what we should expect.

Professor Kenneth Warner of the University of Michigan summarises the state of the evidence as follows

To truly help tobacco users quit and to strengthen global tobacco control, governments need to scale up policies and interventions that we know work. Tried and tested interventions, such as brief advice from health professionals, national toll-free quit lines and cessation interventions delivered via mobile text messaging are recommended. Where economically feasible, governments should also consider promoting nicotine replacement therapies and non-nicotine pharmacotherapies for cessation.

Smoking cessation and harm reduction are compatible, not opposing strategies. There is nothing wrong with some of these smoking cessation measures, but there is much less evidence than WHO implies that they work at scale in real-world settings or reach the smokers who are at the greatest risk (those who don’t want to quit). But they are not alternatives to harm reduction approaches and they work in a different way. E-cigarettes are not primarily a smoking cessation treatment (though they can be that as well) but work as a much safer consumer alternative to cigarettes for people who want to use nicotine.

WHO overstates its own role in addressing smoking. Nor are they the same as the measures promoted by WHO at last year’s World No Tobacco Day – Commit to Quit – when WHO launched a year-long campaign to help 100 million people quit tobacco. A year on we have heard little of this and no progress report. A year later, these claims look like empty hubris. 

Written by Clive Bates

The Counterfactual: What are the policy options for regulating ENDS?

Republished from Clivebates.com with the consent of the author

WHO leads with outright prohibition as its preferred policy, though it has never bothered to justify this with reference to intended and unintended consequences or the rights of smokers to access lower risk products. Almost everything else it proposes functions as a de facto protection of the cigarette trade.

How a country approaches ENDS will depend on factors particular to its situation. ENDS are currently banned in over 30 countries worldwide. In others they are regulated as consumer products, as pharmaceutical products, as tobacco products, other categories or totally unregulated.

Where they are not banned, WHO recommends that ENDS be regulated.

WHO starts with an anchoring bias: that the normal policy response should be the prohibition of ENDS. There is no scientific or ethical basis for this policy. Why would it make sense to ban the much safer nicotine product, deliberately deny law-abiding smokers better options, protect the cigarette trade from competition, stimulate unregulated black markets in vaping products, and draw young people into the illicit supply chain, and therefore into criminal networks? 

WHO has never assessed the costs and risks of ENDS prohibition, but relentlessly promotes it all the same. I have written about WHO’s strong support of vaping prohibition here: Prohibitionists at work: how the WHO damages public health through hostility to tobacco harm reduction

The arguments against prohibition are well put in this document by the consumers’ organisation INNCO: 10 reasons why blanket bans of e-cigarettes and HTPs in low- and middle-income countries (LMICs) are not fit for purpose.

International Network of Nicotine Consumer Organisations (INNCO), 
10 reasons why blanket bans of e-cigarettes and HTPs in low- and middle-income countries (LMICs) are not fit for purpose, March 20

Regulatory objectives include:

Preventing initiation of ENDS use by non-smokers and children, such as by preventing or restricting advertising, promotion and sponsorship, and restricting flavours that appeal to children 

Minimizing as far as possible potential health and/or risks to ENDS users, such as by regulating product characteristics

Protecting non-users from exposure to their emissions, such as by prohibiting ENDS use in indoor spaces where smoking is not permitted

Preventing unproven health claims

Protecting public health policies from commercial and other vested interests

WHO fails to grasp trade-offs and unintended consequences in policymaking. There is nothing in this regulatory package that shows that WHO has grasped the basics of policymaking in this area. The critical policy insight is that excessive regulation of vaping products functions as a barrier to entry and protection of the more dangerous cigarette products. The Royal College of Physicians (London) expressed this well in its 2016 report, Nicotine with smoke: tobacco harm reduction:

Tobacco Working Group. Royal College of Physicians (London) 
Nicotine without smoke: tobacco harm reduction 28 April 2016

There are other trade-offs: the protection of young people from relatively minor risks (e.g. experimental vaping) could have the effect of imposing major risks on adults (continued smoking or relapse from vaping to smoking). A further complication is that for some adolescents, vaping will function as a diversion from smoking. For these young people, the teenagers most at risk, vaping creates a significant health benefit.

Written by Clive Bates

The Counterfactual: Are secondhand ENDS emissions dangerous?

Republished from Clivebates.com with the consent of the author

The aerosols generated by ENDS typically raises the concentration of particulate matter in indoor environments and contain nicotine and other potentially toxic substances. ENDS emissions therefore pose potential risks to both users and non-users.

WHO avoids a comparison between secondhand smoke and secondhand aerosol. Again, WHO uses the words “potentially” and “potential” to avoid saying anything about how toxic or how risky. In my own Q&A on vaping and harm reduction, I highlight three key differences between secondhand smoke and secondhand vape exposure: 

  1. The quantity emitted. Most of the inhaled vapour is absorbed by the user and only a small fraction is exhaled (15% or less, depending on the constituent).  In contrast, about four times as much environmental tobacco smoke comes directly from the burning tip of the cigarette than is exhaled by the smoker. There is no equivalent of this “sidestream smoke” for vaping.
  2. The toxicity of the emissions. Tobacco smoke contains hundreds of toxic products of combustion that are either not present or present at very low levels in vapour aerosol. Vapour emissions do not have toxicants present at levels that pose a material risk to health. Exposure to nicotine, itself relatively benign, is unlikely to reach a level of pharmacological or clinical relevance.
  3. The time that the emissions remain in the atmosphere. Environmental tobacco smoke persists for far longer in the environment (about 20-40 minutes per exhalation). The vapour aerosol droplets evaporate in less than a minute and the gas phase disperses in less than 2 minutes.

The main issue with vaping in public is etiquette and consideration for others. At this stage, there is nothing to suggest that indoor vaping presents a material risk to bystanders. But that does not mean there should be a license to vape at will anywhere. It means the owner of a property should determine the policy for their premises. A government override of these property rights can only be justified if there are material risks to bystanders or workers.

Written by Clive Bates

THE COUNTERFACTUAL: Are ENDS addictive?

Republished from Clivebates.com with the consent of the author

The claim of addiction depends on what you mean by addiction and how the nicotine is delivered. WHO does not bother with such subtleties. There are two issues. 

First, what is meant by the word “addiction”? This term is often used very loosely and often with the intention of stigmatising “the addict”, However, it has a specific meaning that does not apply to all forms of nicotine use. 

E-cigarette use does not meet this definition for most users because nicotine itself isn’t that harmful and vaping just isn’t that harmful either. 

Second, it depends on the way it is delivered. The dependence-forming characteristics of nicotine vary according to how it is delivered to the body – how much and how fast it reaches the brain, and also whether there are other agents that add to the effect. It is quite likely that many smokers who have taken up vaping “transfer” their nicotine dependence to the new products while benefitting from the greatly reduced risk.

This issue was discussed in the paper in the American Journal of Public Health by fifteen past presidents of the Society for Research on Nicotine and Tobacco. 

Balfour, D. J. K., Benowitz, N. L., Colby, et al. (2021). Balancing Consideration of the Risks and Benefits of E-Cigarettes. American Journal of Public Health111(9), 1661–1672.

Written by Clive Bates

The Counterfactual: Are e-cigarettes more or less dangerous than conventional tobacco cigarettes?

Republished from Clivebates.com with the consent of the author

WHO goes through great contortions to avoid truthfully saying less dangerous. The most important feature of this section is that WHO does not answer this question with a truthful answer like “much less dangerous”. This is the correct unambiguous answer based on current scientific knowledge. In fact, WHO does not answer the question it poses at all – I suspect this is in order not to have to answer it truthfully. 

The question is used to imply e-cigarettes may be more dangerous. The question itself creates an anchoring bias: suggesting that it is even possible that e-cigarettes may be as dangerous or more dangerous – as if it is somehow a finely balanced call. It is not finely balanced. Not even close. The reasonable question would be “how much less dangerous are e-cigarettes than conventional tobacco cigarettes?”. The answer is a lot less. 

WHO offers a diversion from the question. Yes, but that formulation is simplistic: it avoids the “how dangerous?” questions and avoids the actual question asked in the Q & A – which is what is the relative risk of smoking and vaping? What if they differ in risk by a factor of about twenty times as many experts believe? Using neither may be a good option – but what about people who want to use nicotine or would find it difficult to stop? 

While ignoring the most fundamental difference (combustion), WHO introduces distracting but relatively trivial differences. WHO approaches this question on the basis that because we don’t know everything we must know nothing, adding the appearance of complexity to obscure more fundamental differences between e-cigarettes and cigarettes – namely that there are no products or combustion and smoke inhalation.

To avoid answering the actual question, WHO evokes a gateway effect. Here WHO just evokes imagined pathways by which the use of the much safer product leads to the use of the much more dangerous product – a kind of sleight of hand to imply that vaping and smoking pose equivalent risks. The problem is that these pathways are based on a gateway theory that does not hold water. 

WHO deploys a device to introduce doubt and to remove confidence that general advice about e-cigarettes being safer can be relied upon. It is a Merchants of Doubt tactic. There are of course differences between different vaping products – and differences arise from the pattern of use between users. This is also the case with combustion products. However, this should not be allowed to obscure the huge difference between the combustion and non-combustion nicotine products at the level of the whole category. The difference between smoke inhalation and smoke-free is the difference that really counts. 

The claim that smoking and vaping have equivalent risk is the Big Lie of tobacco control. It is inconceivable that this would be the case, yet it is an easy and lazy (or cynical) statement to make. When Professor Stanton Glantz made this case he used 700 words, my rebuttal took 13,000 – see: Vaping risk compared to smoking: challenging a false and dangerous claim by Professor Stanton Glantz

As I mentioned above, Public Health England suggests that “stating that vaping is at least 95% less harmful than smoking remains a good way to communicate the large difference in relative risk.” The Royal College of Physicians concurs

“Although it is not possible to precisely quantify the long-term health risks associated with e-cigarettes, the available data suggest that they are unlikely to exceed 5% of those associated with smoked tobacco products, and may well be substantially lower than this figure.”

These are much better ways of answering the question that WHO poses than the answers provided by WHO, which essentially say nothing useful at all, just distraction and obfuscation.

Written by Clive Bates

The Counterfactual: Do e-cigarettes (ENDS) cause lung injuries?

Republished from Clivebates.com with the consent of the author

Nicotine e-cigarettes did not cause the lung injuries described in this section. This entire section is completely misleading and has no place in a Q & A on nicotine e-cigarettes or ENDS (electronic nicotine delivery systems). It is clear beyond doubt that nicotine vaping was not implicated in the outbreak of EVALI discussed in this section.

In fact, there is no evidence for this whatsoever. This is a statement that ENDS (i.e. nicotine products) are implicated in the episode of lung injuries seen in the US in late 2019. The evidence is clearly contrary to this. Here is how I summarised the argument in my critique: The outbreak of lung injuries often known as “EVALI” was nothing to do with nicotine vaping.

Bates, C. (2021). The outbreak of lung injuries often known as “EVALI” was nothing to do with nicotine vaping. Qeios. https://doi.org/10.32388/ZGVHM7.3

This quote is fake and misleading. This is nonsense and not even a real quote from CDC. This is not the wording used by CDC and the word “ENDS” does not appear on the CDC page cited. The reason is obvious: ENDS means “Electronic Nicotine Delivery System” and there are no ENDS that have THC and Vitamin E Acetate (VEA) added because that is not physically possible (see Kozlovich et al, 2021) – these liquids do not mix. Far from being updated every week, this CDC page was last updated in February 2020. 

The wrong time and wrong attribution. That might be because the outbreak had dwindled to almost nothing by February 2020. This is consistent with supply chain contamination (with VEA) that ended once the problem was discovered and the supply chain emptied.

Source CDC

Yet more than two years later, in May 2022, it seems as though anti-vaping activists like the World Health Organisation found that promoting the EVALI story was just too tempting not to use in their misinformation operations. They commit the dual sin of drawing on an episode that is substantially over and misattributing it to nicotine e-cigarettes.

Written by Clive Bates

The Counterfactual: Are e-cigarettes dangerous?

Republished from Clivebates.com with the consent of the author

The World Health Organisation continues to present misleading information about e-cigarettes that spreads doubt and confusion among the public, media and policymakers. This post reviews its latest Q & A and finds multiple errors of analysis, misleading statements, and obvious biases.

The World Health Organisation maintains a Q & A on e-cigarettes. It was updated on 25 May 2022. 

This has been updated several times (see history below). In each of its incarnations, this web page has presented a profoundly misleading account of the risks and benefits of e-cigarettes. It ignores the fact that eight million people are dying annually from smoking (around the same order as COVID-19) and that hundreds of millions of smokers could benefit from switching to low-risk alternatives to smoking. The Q & A is primarily a vehicle for promoting prohibition and generating hostility to the pragmatic public health strategy of tobacco harm reduction. It is anti-scientific, its information is misleading, and its effect or purpose is to sow confusion and doubt rather than to candidly explain e-cigarettes.

I have set out the main sections of the latest Q & A below with a short general commentary on each section followed by the main claims in each section drawn out in block quotes followed by comments.

The table of contents below follows the structure of the WHO’s Q & A. I have highlighted each statement in the WHO Q & A in a box quote and followed by a short commentary on each.

The very framing of the question reveals the problem. The real question is “how dangerous?” This question should be asked in two ways: 

(1) how dangerous compared to the product that dominates the market, that is cigarettes? 

(2) how dangerous compared to some sort of benchmark of acceptable risk, for example, occupational exposure standards or other comparable behaviours? 

If vaping is much less risky than smoking, then there is a large health benefit for people who switch from smoking to vaping. If the use of a product is at a level of risk that is within our normal tolerance of risk, then there is not much reason to mount a big public health response to it – as with caffeine and coffee or moderate alcohol consumption.

In the following paragraphs, WHO never addresses the “how dangerous?” questions. But without addressing them, it has no basis for informing or advising anyone or for suggesting appropriate policy responses.

Electronic cigarettes (or e-cigarettes) are the most common form of electronic nicotine delivery systems (ENDS) and electronic non-nicotine delivery systems (ENNDS) but there are others, such as e-cigars and e-pipes. ENDS contain varying amounts of nicotine and harmful emissions. 

E-cigarette emissions typically contain nicotine and other toxic substances that are harmful to both users, and non-users who are exposed to the aerosols second-hand. Some products claiming to be nicotine-free (ENNDS) have been found to contain nicotine.

Nicotine is the main reason why people smoke or vape. It is a relatively mild psychoactive drug that has several effects – such as helping to control stress and anxiety and improving concentration. That is why people use it. It is dependence-forming, but nicotine is not very harmful in itself. It is not a cause of intoxication, oblivion, violence or, over the long term, serious disease. 

The harm to health is mainly done by the smoke: the toxic gases and sticky particles inhaled into the lungs along with the nicotine (sometimes called ‘tar’). The hazardous chemicals in tobacco smoke that are the main cause of cancer, cardiovascular and respiratory disease are mainly products of combustion formed in the tip of the burning cigarette and as the smoke cools. In contrast, e-cigarettes heat a flavoured nicotine liquid to form an aerosol of tiny droplets, which contain nicotine. But because the liquid is heated but not burnt, there is no combustion and therefore no products of combustion. So the harmful agents in cigarette smoke are either present at much lower levels or not detectable or measurable at all. 

Biomarkers show much lower toxic exposures. This can be seen experimentally by measuring hazardous agents found in the blood, saliva and urine, so-called biomarkers of exposure. These measurements show dramatically reduced exposures to the main hazardous substance of concern compared to smoking. Experts commissioned by Public Health England reviewed the available biomarker literature in 2018 and concluded

Vaping poses only a small fraction of the risks of smoking and switching completely from smoking to vaping conveys substantial health benefits over continued smoking. Based on current knowledge, stating that vaping is at least 95% less harmful than smoking remains a good way to communicate the large difference in relative risk unambiguously so that more smokers are encouraged to make the switch from smoking to vaping. It should be noted that this does not mean e-cigarettes are safe. [link]

The consumption of nicotine in children and adolescents has deleterious impacts on brain development, leading to long-term consequences for brain development and potentially leading to learning and anxiety disorders.

WHO draws on speculative theories that are based largely on rodent studies and large doses of nicotine to make this claim. The key point is that despite many generations of adolescent nicotine users growing up as smokers since the 1950s, no one has so far identified any lasting cognitive impairments in those adults who started using nicotine as adolescent smokers over this long period. It is a difficult area to study, and it is possible there are some ill effects, but this is far from established and definitely not with the unequivocal confidence conveyed by WHO in this answer. 

Writing in the American Journal of Public Health in 2021, fifteen former presidents of the Society for Research on Nicotine and Tobacco summarised the state of knowledge as follows:

Balfour, D. J. K., Benowitz, N. L., Colby, S. M., (2021). Balancing Consideration of the Risks and Benefits of E-Cigarettes. American Journal of Public Health111(9), 1661–1672.

Nicotine is highly addictive …

It is wrong to make the general claim that “nicotine is highly addictive”, although this statement is common. It depends on what is meant by addiction and how the nicotine is taken. I have addressed the question about nicotine addiction under the question heading “Are ENDS addictive?” below.

…and some evidence suggest that never-smoker minors who use ENDS can double their chance of starting to smoke tobacco cigarettes later in life.

WHO falsely asserts the operation of a so-called gateway effect. These claims are often repeated as if there is some evidence that the prior vaping caused the subsequent smoking. There is no evidence to support a causal gateway effect and much to suggest the opposite, notably the dramatic decline in youth smoking in the United States that coincided with a rapid rise in youth vaping, sometimes referred to as the “youth vaping epidemic”. 

The decline in the adolescent use of combustibles (i.e. smoking) accelerated after 2018 – coinciding with the so-called “youth vaping epidemic” 

Common liability is the far more plausible explanation. There is a completely different and much more likely explanation for the observed association: that the same sort of things that incline people to vape also incline them to smoke. These would be things like genetics, parental smoking, mental health status, school performance and delinquency, rebelliousness, and aspects of the family and community context. This is known as confounding by common risk factors, or sometimes as “common liability”. The evidence strongly supports this explanation, not the gateway theory. It means that e-cigarette use is more likely to be concentrated in people who have smoked or would otherwise smoke – offering a significant health benefit concentrated within the population most at risk. 

Evidence reveals that these products are harmful to health and are not safe. However, it is too early to provide a clear answer on the long-term impact of using them or being exposed to them. Some recent studies suggest that ENDS use can increase the risk of heart disease and lung disorders. Nicotine exposure in pregnant women can have similar consequences for the brain development of the fetus.

There is no convincing evidence that ENDS are seriously harmful to health. Once again we see the use of “harmful to health” and “not safe”, without asking the “how harmful?” or “how unsafe?” questions. The (unstated) studies that supposedly show that ENDS increases the risks of lung or heart disease are highly problematic. Almost all ENDS users old enough to experience significant disease have been long-term smokers. It is impossible to separate the effects of their smoking history from the marginal effects of their time as vapers. Some studies even count heart or lung disease episodes that occurred before the vaping started in their calculations of vaping risk. There are many studies that show that ENDS have an observable effect on the body, but there is little to show that these effects amount to a clinically significant risk. 

This is how the US National Academies of Science, Engineering and Medicine summarised the risks in its 2018 report: 

National Academies of Science, Engineering and Medicine NASEM (US).  The Public Health Consequences of E-cigarettes. Washington DC. January 2018. [link]  Launch presentation summary (slide 44)  [link][link]

The long term effects may be negligible. The statement about the long-term is really a statement of the obvious – we do not have the luxury of time travel to observe with certainty what the long term effects will turn out to be. The health effects of long term use may well turn out to be trivial. We do know the toxic exposures involved with vaping are much lower than for smoking (the second point) and therefore we should default to expecting health burdens to be much lower too. Also, it is worth bearing in mind that people can smoke for two decades (from say age 15 to 35) or more and not suffer any noticeable loss of life expectancy. It takes a lot to get sick, even from smoking.

ENDS use can also expose non-smokers and bystanders to nicotine and other harmful chemicals.

There is no evidence of material risk to bystanders. WHO continues with its unquantified approach to risk. The framing “can also expose” is wholly misleading in this context. What matters is how much exposure and to what sort of hazard? I have responded to this assertion under WHO’s question 5. Are secondhand ENDS emissions dangerous?

Electronic delivery systems have also been linked to a number of physical injuries, including burns from explosions or malfunctions, when the products are not of the expected standard or are tampered with by users.

E-cigarette use is likely to substantially reduce injuries. Again, some context is required. Yes, there are isolated incidents involving battery malfunctions or short circuits (e.g. through contact with coins in pockets). But this comes nowhere close to the carnage caused by smoking-related fires. The US National Fire Protection Association gives some perspective: 

  • During 2012-2016, an estimated annual average of 18,100 (5%) reported home structure fires started by smoking materials killed an average of 590 (23%) people annually, injured 1,130 (10%) per year, and caused $476 million in direct property damage (7%) per year.
  • One in 20 home (5%) home structure fires were started by smoking materials. These fires caused almost one in four (23%) home fire deaths, and one in 10 (10%) home fire injuries.
  • Smoking was the leading cause of home fire deaths for the five year period from 2012-2016. Overall, one of every 31 home smoking material fires resulted in death.

Has it occurred to WHO that mass switching from smoking to vaping would dramatically reduce the problem of fires and burns? This is because they do not involve an ignition source.

Accidental exposure of children to ENDS e-liquids pose serious risks as devices may leak, or children may swallow the poisonous e-liquid.

Nicotine e-liquids pose a minor risk to safety. Again, what matters is the scale of this problem and other problems that it offsets. There are accidents caused by almost everything – not least medicines, cleaning fluids, cosmetics and alcohol. Again what matters is the “how much harm?” question. A look at the reports of US Poison Control Centers data (Annual report 2020 – PDF) gives some perspective: 

Pediatric poison exposures and deaths by exposure substance 2020 data 
Table 17C & 17D

Tobacco, nicotine and e-cigarettes combined are ranked at 25 in pediatric exposure reports (17C) and don’t figure in the top 25 for deaths (17E). But this combines tobacco and e-liquid exposure. Table 22 in the report shows that tobacco products account for 72% of the combined total pediatric exposures for tobacco, nicotine and e-cigarettes. Not mentioned by WHO: nicotine medications accounted for 1,608 poison exposures in 2020.

Written by Clive Bates

UK is Right to Delay the Decision on China’s Semiconductor Takeover

The UK government has decided to delay its decision on whether China can take over the UK’s largest semiconductor company. In May, an inquiry into the state of UK chips was announced.

The Consumer Choice Center, a global consumer advocacy group, welcomed the decision, arguing that at a time of great geopolitical turbulence and global chip shortages, the UK should indeed be extremely cautious about any dealings with China.

“China is well-known for building back-doors into its technologies, spying, and breaching users’ privacy. For that reason, the fact that China owns major chip firms in the UK and aspires to expand is concerning. To compensate for the once lenient approach towards Chinese expansion into the UK semiconductor sector, the government should now focus on enhancing domestic semiconductor production,” said Maria Chaplia, Research Manager at the Consumer Choice Center.

“Regaining a competitive edge in the semiconductor industry is vital, but it is impossible without taking an evidence-based approach to PFAS, a grouping of 4000+ man-made chemicals, which are vital for the production of semiconductors. If the UK is serious about increasing domestic chip production, they have to also work to secure the key inputs involved in the production process, and PFAS are one of those key inputs.” said David Clement, North American Affairs Manager at the Consumer Choice Center.

“British green groups have been fear mongering around PFAS, but the UK government should prioritise long-term national security and consumer welfare over populist claims,” added Chaplia.

“With the global chip shortage, the UK has a unique chance to become a semiconductor powerhouse if it doesn’t ban PFAS. Among other things, this will ensure the UK can effectively counter China’s increased chip manufacturing. The UK government shouldn’t succumb to Chinese influence and calls to ban all PFAS,” concluded Chaplia.

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.

PRINCIPLES

  • 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.

Preserve privacy by rejecting a ban on Bitcoin and crypto self-custody in Lithuania

Lithuania’s Finance Ministry has announced plans that would essentially outlaw non-custodial crypto wallets – the practice of self-custodying of Bitcoin and cryptocurrencies on a wallet an individual controls – and impose stricter regulations on crypto exchanges in an attempt to combat money-laundering, terrorist financing, and sanctions evasion. 

The prepared draft law heads to the Seimas and, if passed, would impose stricter regulations on individuals as well as cryptocurrency exchanges in the country.

This bill mirrors a proposed European Commission regulation that has passed various EU Parliament committees but has yet to adopt continent-wide, aiming to restrict cryptocurrency services and institutions.

“Banning 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 – not to mention the harm this does to consumers who want to safely and securely enjoy crypto services,” said Aleksandar Kokotovic, crypto fellow at the Consumer Choice Center, a consumer advocacy group. 

“A measure that aims to prevent money laundering will have very little effect in doing so but will definitely hurt the privacy of Lithuanian citizens and force them to use services based outside of the country, leaving them less secure than they are at the moment,” said Kokotovic.

“Non-custodial Bitcoin and cryptocurrency wallets are basically just code, many of which are open source and can be replicated and forked indefinitely. A government trying to ban code is not only ridiculous but will do absolutely nothing to supposedly stop bad actors. All it will do, in the end, is create a precedent for the government to crack down on its own citizens for using cryptocurrencies,” said Yaël Ossowski, deputy director of the Consumer Choice Center.

“Banning software in 2022 is not only a bad idea that will be impossible to enforce, but will have a wide array of possible negative consequences, including the privacy of financial and crypto customers. 

“We have seen consumers voting with their feet in the past and sometimes being forced to choose service providers in different countries to avoid similar measures. We are still hoping that Seimas will understand the worries around approving such legislation and that they will preserve privacy and safeguard innovation rather than create unfavorable conditions for consumers and businesses,” said Yaël Ossowski, deputy director of the Consumer Choice Center.

The Consumer Choice Center strongly urges Seimas members to vote against this legislation and to preserve the privacy of Lithuanian citizens as well as continue creating a prosperous and friendly business environment for consumers and industry alike.

“We offer the following bedrock principles on smart crypto regulation for lawmakers, hoping to promote sound policies that will encourage innovation, increase economic inclusion across all income groups, all the while protecting consumers from harm,” said Ossowski.

PRINCIPLES

  • 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 for entrepreneurs and consumers in the crypto space,” said Aleksandar Kokotović, CCC’s crypto fellow and co-author of the primer.

“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,” added Kokotović.

The policy primer can be read in full here

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