In war, the Greek poet Aeschylus said, the first casualty is truth.

In the war between Israel and Hamas, there have been plenty of opportunities for lies to achieve political ends. In the United States, we’re seeing the demonization of and crackdown on cryptocurrencies and stablecoins like Bitcoin and Tether.

U.S. Senator Elizabeth Warren (D-Mass.) stirred crypto-skeptic politicians in Washington into a frenzy last month, alleging that Hamas funded its heinous attacks on Israeli civilians with cryptocurrencies such as Bitcoin. This followed an initial report in the Wall Street Journal, which detailed a significant crypto fundraising operation by Hamas across various platforms.

There were congressional hearings, press releases, and letters dispatched to various elements of the national security establishment and to the Biden administration itself, seeking to understand Hamas’ use of cryptocurrency and how it could move money undetected.

Warren penned a letter with 28 other senators and 76 House members demanding answers on the alleged $130 million in crypto used by Hamas, relying on the Wall Street Journal’s story.

The only problem is that the story was false. Or at least it was way overblown.

Just days after publishing its exposé, the Journal was forced to correct its report after a simple analysis revealed that the multimillion figures were wrong.

Evidence produced by the blockchain analytics firm Elliptic showed most of these funds were not sitting in Hamas-linked accounts but were likely brokerage and crypto exchange accounts where the funds originated.

As any user of technologies like Bitcoin and other crypto exchanges knows, every transaction is publicly viewable on the blockchain using a block explorer. When those funds are purchased at regulated exchanges, authorities can trace and subpoena identifying information that these entities must collect from their customers.

If Hamas and its agents were legally able to acquire thousands of dollars’ worth of Bitcoin and other cryptocurrencies — not to mention hundreds of millions’ worth — any user of a block explorer would easily have detected this.

In fact, Hamas militants reportedly stopped accepting cryptocurrency donations once they realized how quickly those transactions would be flagged and ultimately halted by Israeli authorities. The same cannot be said for the rumored billions of dollars held by Hamas operatives in traditional bank accounts in countries throughout the world.

With billions of dollars in Hamas funding in the global banking system and perhaps just a few thousand in various cryptocurrency wallets, one would think that political ire would be raised at banks that have aided and abetted Hamas funding.

Instead, Warren and her anti-innovation colleagues continue to cite this fake news in their efforts to make open blockchain technology inaccessible to American consumers.

Rather than an indictment against Bitcoin or any other cryptocurrency, this episode reveals that many American progressive legislators are getting hoodwinked into banning or restricting a technology that offers tremendous social benefits.

Technologies like Bitcoin offer sound digital money that can be sent to any computer or connected device worldwide. With a limited supply and a proof of work protocol that is both honest and fair, it’s a world of difference from the unlimited printing and ongoing debasement of the U.S. dollar.

It is a revolution that many of us have only begun to grasp.

Unfortunately, rather than embrace the positive effects such technologies could have on American society, too many tech-skeptical politicians are hooked on fake news and unable to resist advancing their goal of banning cryptocurrency for Americans.

For Warren, it was never about Hamas’ barbaric attack on Israel. It was about seizing an opportunity for more control, regardless of the truth.

Originally published here

Because it separates state from money, Bitcoin is inherently a political animal.

Bitcoiners may not want to interact with the state, but the state wants to contend with Bitcoin.

And while there is much at stake at the federal level of the US government – the SEC, CFTC, FinCEN, OCC, Congress, presidential executive orders, agency rulings – there has been a silent march through state institutions, resulting in policies (attempted or enacted) affecting Bitcoin and the people and entities that embrace Satoshi’s innovation.

Documenting fully this is an exhaustive exercise, but it is worth understanding how states are dealing with Bitcoin’s rise. These legislative attempts don’t affect the Bitcoin protocol itself, but rather how an individual citizen will be able to interact with Bitcoin, whether sovereignly or otherwise.

Some states have embraced Bitcoin activities as first-movers (Wyoming, Texas, Montana, New Hampshire, etc.) while others have done everything possible to restrict it (New York, Hawaii). Many others are still to be determined.

KEY AREAS

As a crude summary, there are generally three issue areas where regulations touch Bitcoin at the state level: exchange, energy, and taxation.

1. Exchange concerns fiat on/off ramps for Bitcoin (think cryptocurrency exchanges, brokerage firms, custodians, and ATMs) and has the deepest regulatory scope of each of the issue areas. This is exercised by selective offering of money transmitter licenses, various fees and liquid net worth requirements for selling digital assets, or reporting rules on both buyers and licensed sellers of Bitcoin. Most of the Know-Your-Customer/Anti-Money-Laundering (KYC/AML) rules are adopted with this in mind.

2. Energy is becoming a more important issue area for Bitcoin regulation, as a number of jurisdictions are either welcoming commercial digital asset mining firms or making it next to impossible for them to operate locally. This has been both restricted but also explicitly protected at both the state level and local level (counties, towns, and cities). This has been done for environmental concerns (real or inflated) or because of perceived load threats to energy grids. As such, it is proof-of-work itself that drives regulators to act.

3. Taxation has thus far had a light touch at the state level, mostly owing to the federal government’s unclear or simplified classification for Bitcoin as an asset. Whether Bitcoin is actually commodity money, or can be used as a method of payment at all, also falls into this category and is becoming a growing attack vector. 

Save for Nebraska, every state legislature is bicameral with a House and Senate, similar to the federal government. There is the executive branch, run by a governor and his cabinet, and a number of state agencies headed by either career bureaucrats or gubernatorial appointees.

State House Representatives and State Senators have thus far been the primary movers of Bitcoin policy at the state level. Lately, however, agency heads – especially state banking supervisors and state securities regulators – have flexed their muscles.

Rather than a simple ranking, it is best to examine state policy on Bitcoin through the lens of the various licenses, programs, and tangential laws.

And that brings us to the body of state intervention that interacts the most with Bitcoin and cryptocurrencies more broadly: money transmitter licenses.

Money Transmitter Licenses

A money transmitter or transmission license (MTL) is the primary engagement between crypto exchanges and state regulators. For a Bitcoin exchange or brokerage to legally offer services to residents in a given state, it must comply with state laws on how “money transmitting” businesses are regulated.

These license holders must submit information to the state in order to remain compliant, hence firms require Know Your Customer data collection such as your social security number, name, date of birth, and more.

This is separate from the federal Money Service Business license from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which considers money laundering, narcotics, and terrorism funding and usually partners with chain surveillance firms for data retrieval.

State MTLs grant Bitcoin firms the ability to exchange fiat and Bitcoin to customers, and are thus a core part of the regulatory stack for any company that wishes to serve clients.

Recently, when South Dakota and Texas residents were told they could no longer use certain Bitcoin exchanges and brokerages, that stemmed from that Bitcoin firm — or their contracting custodian — losing their money transmission license.

Except for Montana, every state in the union has a procedure requiring registration of entities that offer “money services”: banks, fintech institutions, mortgage companies, money managers, and virtual currency businesses such as exchanges or brokerages.

My organization, the Consumer Choice Center, has drafted a model policy to introduce reciprocity of money transmitter licenses — meaning that if an exchange or firm has one state’s MTL, it should be easily accepted and applicable in another state.

The application process for a money transmission license varies, but often it will usually require a significant amount of liquid assets denominated in US dollars (sometimes up to $5 million) or a surety bond, a debt security held by a third-party in case of future claims by customers on the license holder, which can also range into the millions.

New York state’s BitLicense — the most comprehensive in the country — requires a very high barrier for any firm that deals with cryptocurrencies. Not more than 30 companies have successfully received a BitLicense, and most Bitcoin-only firms have opted to stay out of New York rather than complying with the law, which is a strong enough signal. The bond requirements, net worth stipulations, and various reporting requirements often prove too costly for compliance. Not to be outdone, New Jersey’s version of the BitLicense has thus far sailed through legislative committees, and is expected to pass this session.

These stipulations, depending on the state, mean that an upstart Bitcoin brokerage will need significant cash just to begin legally selling Bitcoin. If an exchange wants to serve customers in all 50 states, it will take significant time and money, lawyer billing hours, and conversations with lawmakers and regulators. It may also require an open review of their operational security and IT.

Ohio and Washington, for example, require third-party audits of computer systems and custodial services if firms deal with virtual currency.

While that may seem rather stringent, some states have decided to sidestep this requirement for digital currency businesses that only buy and sell Bitcoin directly to customers.

The states of Indiana, Kansas, Massachusetts, New Hampshire, Pennsylvania, Rhode Island, Texas, and Utah have independently determined that fiat to Bitcoin (or cryptocurrency) exchange between two parties (company and customer) do not meet the standard for money transmission, and therefore do not require licenses. The same for purely peer-to-peer Bitcoin transactions. Tennessee only requires a money license if an exchange also allows you to sell your Bitcoin.

If you’re a resident of any of these states — plus the aforementioned Montana — you’ve likely had easy access to most Bitcoin exchanges and services.

The rationale for this determination depends on the state. Either they do not qualify Bitcoin as “money” — and thus there is no need to offer a money transmitter license — or they do not consider virtual currency on/off ramps between two entities as “transmission” of money. These definitions, however, are slowly changing due to the influence of a few organizations.

Conference of State Bank Supervisors

In recent years, efforts by state banking supervisors (the principal bank regulators in each state) have aimed to unify the application process of money transmission licenses, namely through the Nationwide Multi-State Licensing System and Registry (NMLS). 

This website serves as the primary application portal for virtual exchanges and brokerages wishing to offer services to customers in multiple states (as well as mortgage dealers). The Multistate MSB Licensing Agreement Program now comprises 31 out of 50 states, giving any applicant a simplified application procedure that is determined by the NMLS governing board.

While it is up to each state’s banking supervisor to review these applications and grant them, the NMLS is the official entry point and communication portal for Bitcoin companies in these 31 states wishing to apply for a money transmission license. 

What makes this application process unique is that NMLS is not a government agency or institution held accountable in any democratic fashion. This registry is technically run by the Conference of State Bank Supervisors, a $120 million nonprofit organization governed by a rotating set of state banking supervisors. 

While the CSBS is nominally a leadership and training organization for banking supervisors and their staff, it has in recent years taken a lead role in crafting model policy to further “regulate and unify” exchange of Bitcoin and other cryptocurrencies through money transmission licenses. Its first model legislation on Bitcoin was proposed back in 2014.

Its latest attempt is the Model Money Transmission Modernization Act. This bill aims to simplify money transmitter legislation in any state that adopts it, establishing rules on the information to be collected, the rights of customers if they are defrauded, and various definitions on so-called “virtual currencies”. It also specifically exempts node runners and noncustodial services. It is fairly boilerplate.

Where some take issue with the model bill — and the various versions that have been introduced or adopted — is that it takes great pains to claim decentralized virtual currency as “not money” (Section 13.03 (b)(9)). Previous versions of this bill defined “money” to also represent legal tender in foreign countries, but considering El Salvador’s embrace of Bitcoin as legal tender in 2021, this was amended.

The more problematic aspect of this scenario — and one we see all too often in lobbying — is that state banking supervisors are supposed to follow the law and policies written by state legislatures rather than crafting the legislation themselves. That conflict of interest is very clear, and should be made apparent in states where these bills are introduced.

For all intents and purposes, the state banking supervisors do not yet want to consider Bitcoin as legal tender in the banking system. They will have to follow rather than lead.

Uniform Law Commission

Another nonprofit organization with significant sway in the realm of Bitcoin policy at the state level is the Uniform Law Commission, a 130-year-old organization that drafts model legislation to harmonize commercial state law. It is led by appointees from each US state and territory who must be licensed attorneys and counts thousands of lawyers as members.

The ULC partners with the American Law Institute to publish the Uniform Commercial Code, a comprehensive set of policies intended to offer each state a package of universal commercial rules to police business activity.

The latest amendment to the UCC, known as Article 12, is solely dedicated to virtual currencies such as Bitcoin and its crypto offspring. The UCC defines these as  “controllable electronic records” — or CERs. 

The bill section delves deeply into Bitcoin terminology — UTXOs, multisig, self-custody, custodians, etc. It makes clear that CERs — including Bitcoin — may be  a medium exchange but are not “money” per US law.

“Money” means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization, or pursuant to an agreement between two or more countries. The term does not include an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government.

What this model language means, therefore, is that Bitcoin may be many things, but it is not money. It should still be, however, subject to money transmission licensing requirements.

Since January 1, 2023, 22 states have already introduced a version of Article 12 of the UCC. None have yet passed it.

If these bills make it into law, it is uncertain how it would affect Bitcoin and those who use it, but it likely wouldn’t be anything drastic. 

Unlike previous commentary, these bills would not lay the groundwork for any type of Central Bank Digital Currency (CBDCs) either, but would rather try to restrict what states consider money going forward. This would open the path to more states opposing CBDCs rather than accepting them. Adoption of CBDCs will be a threat at the federal level, but would take significant time, and effort, to trickle down to state policy.

Regulatory Sandboxes

One more hopeful aspect of Bitcoin-specific legislation at the state level has been the introduction of so-called “regulatory sandboxes”. These programs allow firms — mostly innovative companies — to offer products and services for a set period of time before they’re forced to apply for a formal license.

In states that have passed such measures, such as Utah, Nevada, West Virginia, Wyoming, Florida, and North Carolina, that means Bitcoin-only businesses have ample room to quickly scale innovative solutions for customers.

The Libertas Institute was instrumental in pushing for the first-in-the nation statewide regulatory sandbox in its state of Utah, and they have a great write-up here. The rapid growth of regulatory sandbox programs will aid further adoption of Bitcoin and Bitcoin-adjacent firms for years to come.

‘No Action Letters’

Another positive development that has helped Bitcoin brokerages and firms offer more services are so-called “no action” letters issued by state securities regulators. 

These formal letters recognize a firm’s ability to be “exempt” from additional burden of money transmitter licenses according to established criteria. Usually, this is because the firms are only facilitating direct exchange of fiat for Bitcoin (or vice versa) to the customer, or in purely peer-to-peer transactions.

A good number of these have been issued in states like Arkansas, California, and Idaho and have allowed relative ease for Bitcoin companies to operate there — at least where money transmitter licenses are concerned.  

There is no formal process for obtaining one of these letters, but it is generally understood that a legal representative seeks an opinion from the securities regulator 

However, these letters are just “promises” to not enforce particular laws on firms, meaning any particular policy or law change (or change in administration) could render them null and void.

Proof of Work

The effective ban on Bitcoin mining (hashing) in the state of New York in November 2022 is the most notable, but it won’t be the last for proof-of-work. That law was passed using environmental justifications, requiring onerous reporting standards that any commercial mining firm would be unable to meet or afford.

Other states and localities have also heard concerns about energy grid usage, and some public utilities have entertained discriminatory pricing for commercial miners. Preventing energy pricing nondiscrimination via model policy is a necessary step forward for protecting commercial mining specifically and hashrate more generally.

States such as Rhode Island, Kentucky, Missouri, Montana, Oklahoma, Wyoming and Mississippi have recently adopted various incentives to both protect proof-of-work and to entice Bitcoin miners to move to their states.

Several state-based advocacy organizations have been successful in advancing legislative appeal and model policy for protecting mining, establishing microgrids, tapping orphaned wells, and more, and most of the excitement has been in traditionally red states. These measures will continue to give confidence to commercial mining firms, as well as protecting solo miners.

While various jurisdictions will seek to restrict commercial Bitcoin miners, the healthy balance of states needing both revenue and investment will likely serve as a countermeasure to those efforts. The economic incentives, as well as the larger opportunity for investments and capital, create a more hopeful path forward for proof-of-work in the United States.

Taxation

On taxation, we can see that most states have opted to follow the IRS’ definition of Bitcoin and other virtual currencies as simply “property”. 

Filing for taxes on cryptocurrency transactions focuses more on the Bitcoin-to-fiat conversion than vice versa, meaning that capital gains taxes could apply if there are gains.

Montana, once again, is an exception to these rules, as is Wyoming. Both states exempt digital currencies from taxation and explicitly claim that any digital currency projects or firms won’t be treated as securities.

Thankfully, most states have not issued any other guidance or laws on taxation as of yet, only requiring businesses that receive Bitcoin and other digital assets to report that income in dollar denominations. HODLing without selling remains a tax-free strategy, but that determination is best offered by a tax advisor or attorney in your state.

Model policy that preempts county and local taxation and restrictive regulation, as we have outlined in our Smart Cryptocurrency Policies Act, would also be an interesting way to ensure broad state adoption of good Bitcoin policy.

Friends and Enemies

In my time advocating for consumer-friendly policies on Bitcoin at the federal and state level, as as as in Europe, it has been frustrating to see the hundreds of millions of dollars of “crypto” money spent advancing certain policy goals that would only benefit certain projects or exchanges rather than users of decentralized cryptocurrency protocols, like Bitcoin. 

The millions spent by FTX and Sam Bankman-Fried to gain political influence, specifically with members of the US House and Senate Agriculture and Finance Committees — which respectively oversee the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) — are only the more recent lobbying dollars that come under scrutiny. 

In 2022, over $22 million was spent in the nation’s capital by centralized coin companies, exchanges, crypto industry associations, and blockchain firms — and that only counts spending on lobbying contracts. It does not even consider the hundreds of millions more given to political campaigns, politically-connected foundations, PR agencies, and legal firms fighting various issues in court.

While this is an ordinary process — and one practiced by nearly every highly-regulated industry in the US — the fact remains that much of this has hinged on “classification” of digital assets and who the ensuing regulator would be, rather than how individual consumers and users of token projects or decentralized protocols like Bitcoin could benefit. The same is true at the state level.

On advocacy, we’ve also seen these same centralized coin companies deploy millions to support organizations like Greenpeace, which started a campaign to demand that the Bitcoin network “change the code” to switch from proof-of-work to proof-of-stake because of the carbon footprint of mining firms. 

In all of these instances, the focus has been on elevating particular companies rather than consumers of those companies and consumers more broadly. This is actually where the focus and energy should be. The latter approach, coupled with education by organizations such as the Bitcoin Policy Institute, will end up helping Bitcoin adoption more than any lawsuit or agency letter.

On the other end, organizations such as Greenpeace, the Uniform Laws Commission, the Conference of State Bank Supervisors will use their resources to make Bitcoin adoption more difficult or to change it completely. Luckily, the protocol will continue to stand the test of time.

Conclusion

While various federal institutions bargain for regulatory oversight on Bitcoin and its crypto offspring, many states have led the way on empowering residents interested in owning, holding, and spending Bitcoin. Various regulatory measures, especially money transmitter licenses, do limit one’s ability to acquire Bitcoin from regulated entities, but thus far, greater education among state lawmakers has only led to better rules to allow the Bitcoin industry to grow.

While Bitcoin’s march through state policies is positive so far, there is ample reason to suspect that it could be upended at any time, whether or not the federal government enacts new laws. 

The entrenched interests in state-level lobbying, banking, payment services, and environmental groups will continue to serve as a barrier, and they will likely have some wins, but this will only be achieved at a slow enough pace that will fail to keep up with the innovation and resourcefulness of Bitcoin entrepreneurs. Not to mention the protocol itself.

As states continue to evolve as “laboratories of democracy,” it is clear that those that remain open to the innovations offered by Satohi’s invention will end up better for it. I hope that message will continue to resonate.

Originally published here

De nombreuses banques centrales ont annoncé qu’elles commençaient à explorer l’idée d’introduire des monnaies numériques de banque centrale (MNBC) : de l’e-naira, une MNBC émise par la banque centrale du Nigeria, au yuan numérique en Chine, en passant par la Banque centrale européenne, qui explore l’idée de l’euro numérique.

En fait, selon une étude de la Banque des règlements internationaux, 90% des 81 banques centrales interrogées ont étudié, sous une forme ou une autre, l’idée de lancer une MNBC.

Selon la même enquête, un nombre croissant de pays adaptent l’autorité légale des banques centrales en leur donnant des dispositions qui permettent le lancement de ces monnaies numériques.

Des cryptomonnaies centralisées

Les banques centrales concernées font valoir que les MNBC contribueront à l’inclusion financière en offrant un meilleur accès aux services financiers aux personnes sous-bancarisées et non-bancarisées, qu’elles entraîneront une réduction significative de la fraude et du blanchiment d’argent et qu’elles amélioreront l’efficacité et permettront en fin de compte une politique monétaire meilleure et plus efficace grâce à un contrôle accru de la masse monétaire.

Les MNBC sont souvent considérées comme la réponse du gouvernement aux cryptomonnaies, la façon dont les banques centrales tentent de s’adapter à l’époque et de numériser la monnaie. Toutefois, à l’exception de l’utilisation de technologies similaires, elles sont fondamentalement différentes du Bitcoin et de nombreuses autres cryptomonnaies.

La différence la plus importante entre les MNBC et le Bitcoin réside dans le niveau de centralisation et de contrôle. Alors que le Bitcoin est une monnaie entièrement décentralisée fonctionnant sur un ledger décentralisé qu’aucune personne ou organisation ne peut contrôler, les CBDC sont émises et entièrement contrôlées par une banque centrale qui en contrôle ainsi l’approvisionnement, les émissions et l’utilisation.

Le Bitcoin a été créé comme une alternative décentralisée aux monnaies fiduciaires traditionnelles et comme une réponse aux politiques monétaires des banques centrales qui créent de l’incertitude et sont responsables de la dévaluation de la monnaie, avec des effets d’entraînement dans toute l’économie. Les MNBC doteraient les gouvernements d’outils permettant un contrôle total, rapide et facile de la politique monétaire, jusqu’à cibler les entreprises, les organisations et les particuliers.

Le niveau de contrôle qu’un Etat aurait sur chaque transaction et la capacité d’appliquer la censure des transactions sur n’importe qui donneraient aux dirigeants un niveau de contrôle sans précédent dans l’histoire, un outil dont n’importe quel dirigeant totalitaire d’il y a quelques décennies aurait seulement pu rêver.

Une étape de plus

On pourrait arguer que la plupart de l’argent est déjà numérique, une collection sans fin de 0 et de 1. Cependant, la distinction cruciale est qu’aucune base de données unique ne peut suivre et superviser chaque transaction existante. Il existe un certain nombre de lois et de règlements qui permettent aux forces de l’ordre de demander l’accès à des dossiers, mais les tribunaux doivent donner leur accord pour de telles actions.

En renonçant à ces contrôles et équilibres actuellement en place et en autorisant un accès en un clic aux comptes des citoyens, on donnerait non seulement un pouvoir sans précédent en termes de violation de la vie privée, mais aussi la possibilité de surveiller ou de désactiver des comptes indésirables sur la base de toute violation perçue ou réelle.

Retirer à une personne toute sa capacité à subvenir à ses besoins en verrouillant ses comptes équivaut à l’emprisonner. Donner à des fonctionnaires la possibilité de geler ou d’interdire certains comptes sans procédure régulière pourrait porter gravement atteinte aux principes de l’Etat de droit sur lesquels repose notre société.

La possibilité pour tout fonctionnaire élu ou nommé d’affecter de la sorte les moyens de subsistance d’un citoyen pourrait avoir de graves conséquences, telles que la mise en danger de la capacité des citoyens à utiliser leur droit à la libre expression dans la crainte que leur vie soit ruinée en un seul clic.

Il n’est par ailleurs pas difficile d’imaginer les nombreuses façons dont un acteur malveillant pourrait utiliser ce pouvoir centralisé. De nombreuses autres conséquences involontaires sont possibles et certaines pourraient créer d’immenses niveaux de méfiance sociale.

Ensuite, il y a la question de la vie privée. Les transactions effectuées à l’aide des MNBC peuvent être enregistrées sur une blockchain publique, ce qui permet à d’autres de suivre et d’analyser les données financières. Le fait que des citoyens utilisent un outil susceptible d’affecter fondamentalement leur vie privée à une échelle inimaginable jusqu’à présent dans l’histoire de l’humanité constituerait une grande violation des droits à la vie privée et entraînerait, sans aucun doute, des problèmes supplémentaires.

Vous pensiez que votre historique de navigation pouvait être retourné contre vous ? Il ne serait pas beaucoup plus amusant que n’importe qui ait accès à toutes les transactions monétaires que vous avez effectuées, et il est une fois de plus facile d’imaginer des dizaines de façons dont de mauvais acteurs pourraient exploiter l’accès à ce type d’informations.

Remplacer le Bitcoin ?

Une autre conséquence potentielle souvent négligée de l’introduction d’une MNBC est la concurrence monétaire numérique. Si nous assistons à une augmentation des monnaies numériques émises par les banques centrales, il est probable qu’elles entreront dans une course avec les monnaies émises par d’autres pays ainsi que les monnaies privées ou décentralisées, telles que le Bitcoin.

Ce type de concurrence pourrait exposer les citoyens non avertis à des fluctuations monétaires imprévisibles et créer une instabilité encore plus grande pour certaines monnaies nationales. La façon dont cela pourrait affecter le pouvoir d’achat et conduire à des troubles civils potentiels est évidente.

Ce ne sont là que quelques exemples de la façon dont l’adoption des monnaies numériques des banques centrales pourrait affecter la vie telle que nous la connaissons.

Il est facile de voir comment une monnaie extrêmement centralisée, hautement contrôlée et surveillée mettrait fin à de nombreuses libertés dont jouissent nos sociétés et montre pourquoi, à l’inverse, le Bitcoin, une monnaie hautement décentralisée, sécurisée et résistante à la censure, est immensément important et représente l’un des outils les plus puissants dont dispose l’humanité aujourd’hui pour préserver ces libertés.

Originally published here

When the Securities and Exchange Commission announced charges against FTX CEO Sam Bankman-Fried this week, it ended a nearly 2-month-long drama.

Bankman-Fried’s unethical business setup between his hedge fund Alameda Research and crypto exchange FTX (including the 130 related companies now in bankruptcy) were enough of a worry for the broader cryptocurrency economy and devotees of decentralization. But as we’ve come to learn, the abuse of customer money was far worse.

There were billion-dollar loans to Alameda Research and FTX executives and staff, comingling of customer and company assets between the various entities, and seemingly invisible liquidity printed up on one company’s balance sheet while it was actually on another. These meet the classic definitions of fraudulent behavior.

Many perceive the FTX collapse as a novel crypto affair, dealing with digital assets and cryptocurrencies. But FTX’s downfall is best described as a typical financial fraud found on Wall Street.

FTX ran a fractional reserve bank using printed money as collateral, gambling away customer money in risky products while paying out clients using money from other investors.

Bernie Madoff could not have designed it better.

While many will claim that more regulation or oversight is necessary for the crypto industry in the aftermath, the case of FTX seems more like a failure of existing systems than a loophole.

Regulators at the Securities and Exchange Commission, the Commodity Futures Trading Commission and members of Congress regularly met with FTX’s team, lavishing praise on their meteoric rise.

Celebrity endorsements, Super Bowl ads and stadium sponsorship deals gave the offshore exchange clout with mega investors such as Kevin O’Leary and Bill Ackman, who still defend Bankman-Fried. Highly regarded banks and investment funds similarly poured billions of dollars into the company’s pockets while doing limited due diligence.

Whatever failure that may be, it is not one of unclear regulation or the speculative nature of digital currencies.

Bitcoin — as a decentralized digital currency — did not cause each of the player in the FTX saga to look the other way.

A prudent approach would be to apply cautious regulation that recognizes the revolution of cryptocurrencies and enforces existing laws.

The answer to preventing the next FTX lies less in creating convoluted regulatory environments stricter than the banking system, as some propose, and more in applying existing laws while promoting a pathway for legitimate entrepreneurship.

Self-dealing, fraud and market manipulation remain illegal and should be prosecuted.

These are basic principles that we have all agreed to follow, and one we hope our public officials recognize, no matter the asset.

Originally published here

Lorsque les progressistes politiques abordent des sujets tels que l’inflation, les impôts ou les méfaits des entreprises, ils prétendent parler au nom du peuple. Qu’il s’agisse de la classe ouvrière ou des minorités, les progressistes visent à façonner la politique gouvernementale pour protéger ceux qui risquent constamment d’être exploités.

Mais lorsque ces mêmes personnes, comme la sénatrice américaine Elizabeth Warren (D-MA), se tournent vers des technologies innovantes comme Bitcoin et sa progéniture crypto (crypto-monnaies avec un immense potentiel pour autonomiser les Américains des classes moyennes et inférieures), ils préfèrent le rouleau compresseur à la Coup de main.

De nombreux idéaux progressistes pourraient être atteints avec les crypto-monnaies : non détenues par les banques, pas d’intermédiaires, des frais peu élevés, des transactions rapides et une bouée de sauvetage contre une vie piégée de dettes et de pauvreté.

N’importe qui peut télécharger un portefeuille mobile à partir de sa boutique d’applications pour smartphone, générer une adresse Bitcoin et recevoir immédiatement de petites portions de la crypto-monnaie d’une manière sécurisée et sans confiance, quels que soient sa race, son sexe, son orientation, son statut économique ou même son emplacement.

L’auteur Alex Gladstein a fourni de nombreuses histoires sur le Bitcoin offrant une véritable alternative, donnant aux citoyens les moyens d’agir dans les pays où les devises gonflent rapidement ou dans les pays autoritaires avec des contrôles de capitaux.

Pour les près de 6 millions d’Américains qui ne sont pas bancarisés (sans compte bancaire), l’utilisation de crypto-monnaies comme Bitcoin pourrait être une aubaine. Il n’y a aucune exigence de revenu pour utiliser Bitcoin, pas besoin d’une adresse physique et pas besoin d’utiliser une pièce d’identité. 

Pour les millions d’Américains qui envoient des fonds à l’étranger, un nombre croissant d’entre eux utilisent des transactions Bitcoin à faible coût au lieu des services de virement bancaire traditionnels, qui s’accompagnent souvent de frais à deux chiffres.

Cash App, l’une des applications financières les plus populaires, a entièrement Bitcoin intégré pour envoyer et recevoir des fonds entre amis et famille, et un nombre croissant de marchands en ligne et en personne acceptent désormais Bitcoin.

Read the full article here

When political progressives address topics like inflation, taxes, or corporate wrongdoing, they claim to speak for the people. Whether it’s the working class or minorities, progressives aim to shape government policy to protect those at constant risk for exploitation.

But when these same individuals, such as U.S. Senator Elizabeth Warren (D-MA), turn their focus to innovative technologies like Bitcoin and its crypto offspring (cryptocurrencies with immense potential to empower middle and lower-class Americans) they prefer the steamroller to the helping hand.

Many progressive ideals could be achieved with cryptocurrencies: not owned by banks, no middlemen, low fees, fast transactions, and a lifeline from a trapped life of debt and poverty. 

Anyone can download a mobile wallet from their smartphone app store, generate a Bitcoin address, and immediately receive small portions of the cryptocurrency in a trustless, cryptographically secure manner regardless of their race, gender, orientation, economic status, or even location. 

Author Alex Gladstein has provided plenty of stories of Bitcoin providing a real alternative,  empowering citizens in countries with rapidly inflating currencies, or in authoritarian nations with capital controls.

For the close to 6 million Americans who are unbanked (without bank accounts)  using cryptocurrencies like Bitcoin could be a godsend. There are no income requirements to use Bitcoin, no need for a physical address, and no need to use an ID. 

For the millions of Americans who send remittance payments abroad, a growing numberuse low-fee Bitcoin transactions instead of traditional wire transfer services, which often come with double-digit-percentage fees.

Cash App, one of the most popular finance apps, has fully integrated Bitcoin for sending and receiving funds among friends and family, and a growing number of both online and in-person merchants are now accepting Bitcoin.

While there will inevitably be some technical challenges, especially for senior citizens not enamored by technology, the experience of growing adoption in developing countries gives hope to the idea that cryptocurrencies could be a progressive triumph.

The disintermediation from corporations or politically connected entities should thrill a populist champion like Senator Warren, who has made her reputation fighting banker-bailouts and criticizing cozy relationships between financial institutions and the Federal Reserve.

Unfortunately, in the wake of the collapse of FTX, one of the world’s largest cryptocurrency exchanges, progressives like Senator Warren want to completely snuff out the crypto ecosystem, rather than simply enforce the laws to rid it of bad actors.

The actions of FTX CEO Sam Bankman-Fried, the crypto wunderkind and once-second-largest political donor to Democrats, now alleged to be the kingpin of an $8 billion fraud or Ponzi scheme, have brought us to this moment. The allegations include blurry accounting silos between customer and company accounts, missing funds, and billions of dollars’ worth of tokens given to his own hedge fund Alameda Research to leverage economic power in the crypto markets.

Senator Warren has a right to be outraged, as do millions of FTX customers with funds either missing or locked up in bankruptcy, and millions more crypto-holders are now dealing with the price fallout.

But as the Senator states in a recent op-ed, these alleged crimes are addressed by existing law enforcement and regulatory agencies, whether the FBI or SEC. Fraud, insider dealing, and market manipulation aren’t suddenly different because they occur with crypto tokens.

Where the Senator strays too far is in seeking to completely dismantle crypto alternatives and the economy supporting them.

One of her objections is the industry of proof-of-work mining that uses electricity and computing power to confirm new blocks and protect the Bitcoin blockchain. In her view, these firms are “polluters,” straining electricity grids. In any other progressive era of economic growth, these firms would be championed as innovative upstarts charting the American dream. 

The growing share of miners using renewable energy and repurposing methane pollutionfrom gas and oil wells to fuel machines, thereby capping greenhouse gas emissions, would be enough to headline any global climate change conference. But in progressive states like New York, lawmakers have all but killed this.

That same mentality drives Senator Warren’s desire to ramp up surveillance on each and every crypto transaction. This would also be a dangerous precedent.

Donating crypto to a pro-choice charity or an environmental activist group could make someone a target of figures who oppose these causes. Tech-savvy grandmothers sending crypto payments to their grandchildren, or workers who opt to receive their payments in Bitcoin, would effectively be treated as criminals. Elevating government power to this degree, while reducing our individual liberties, is far from progressive.

While it is nowhere near as mainstream as its proponents would hope, Bitcoin was created because of the flaws of the traditional banking system. Using regulations and laws to strangle it down into Banking 2.0 not only misses the point, but it erases the opportunity for millions of Americans who want an alternative.

Our political officials should moderate their knee-jerk instinct to regulate a new technology like Bitcoin into oblivion. Technological progress should be an inevitable part of a pro-growth agenda in political capitals, and Bitcoin is only one example. Cryptocurrencies may achieve broader adoption, or they may fail, but we deserve an opportunity to try. The government should in all circumstances be tech-neutral: it shouldn’t try to pick the winners or losers of any nascent industry.

Wealthy progressive legislators may not need Bitcoin on a daily basis, but there are millions of others who would greatly benefit from the option of being able to use it. 

Using the failures and crimes of politically connected crypto-exchanges like FTX to effectively chill innovation in this sector and regulate it away would deprive many Americans of new economic technology that could change lives for the better. That’s the furthest thing from progressive, and would severely restrict our capacity for entrepreneurship, innovation, and human flourishing.

Originally published here