By Iz Lo, AKA Izzy
Nation states have been in the news for banning or proposing bans on cryptocurrency. Should this rightly concern us?
The European Union (EU) proposed prohibiting anonymous cryptocurrency transactions as part of a broader plan to combat money laundering and terrorism (Bloomberg, July 2021). EU law makers argue that the laws for existing finance systems should also apply to cryptocurrencies. The problem with this logic is that the existing laws haven’t helped, and more laws from the same archaic groupthink institutions will continue to fail.
The Pandora Papers are 12 million leaked documents exposing tax havens, shell corporations, offshore accounts, and money laundering by some of the world’s most rich and powerful — demonstrating the intent to hide the true ownership of billions of dollars of assets (Investopedia and bbc.com, October 2021). Existing laws have proven to be useless, and now proposals to expand them will cost tax payers dearly. The EU proposes to supervise financial transactions by creating a new EU body with around 250 staff members to supervise risky financial institutions (Bloomberg, July 2021).
How many tax Euros does it cost to establish a new EU body with 250 staff members? Let’s unpack the added expense. In 2016, EU civil servants made about €91K on average (Brusseltimes.com, June 2016). A conservative estimate with 3% annual inflation (double that as of late) should see 2022 salaries of at least €100K. Just for the staff members salary it’s €25MM and then there’s all the office space, travel, and various other expenses. For what? Monitoring a few “risky” financial institutions? What about the less risky institutions? What about all the peer-to-peer transactions that can never be traced? What a terrible, irresponsible idea it would be to stand up an entire organization just to “supervise” a small segment of crypto activity. Clearly, citing failed legislation and implementing expensive countermeasures is poor governance.
So, what does good governance look like?
Good governance are laws and law enforcement that protect and encourage citizens, rather than exploiting them for the profit of government enterprise. This means carefully considering human rights, focusing law enforcement on stopping those who would conspire to harm fellow citizens, and finally, incentivizing technology development that supports human rights.
Up first, human rights.
If we allow the narrative to be that money should aid law enforcement as a population surveillance tool, then we deprive citizens of liberty. One such liberty afforded to democratic governments is protection against illegal search and seizure. Essentially, privacy as a human right. This human desire for privacy is illustrated in pop culture:
Well, my glove compartment is locked, so is the trunk in the back and I know my rights so you gon’ need a warrant for that. “Aren’t you sharp as a tack? You some type of lawyer or something? Somebody important or something?” Well, I ain’t passed the bar, but I know a little bit. Enough that you won’t illegally search my Sh!7!
(Jay-Z 99 Problems Lyrics, November 2003)
A sentiment echoed years later by Ryan Selkis in his 2022 crypto predictions.
“Peer-to-peer transaction reporting and disclosure requirements on self-custody assets are unconstitutional overreaches. Get a warrant or we’ll see you in court.”
(Selkis, December 2021)
To clarify self-custody,
Self-custody is a means of holding your digital assets by which only you have access to them. This means that you choose not to use a third party, and instead will manage your private key personally
(Dfinity, 2021)
What gets overlooked by conventional regulators is the fact that both Centralized custodial exchanges (CEX) and Decentralized self-custody exchanges (DEX) can exist harmoniously. Surveillance of money in centralized and regulated exchanges may be at direct odds with illegal search and seizure, but this could also be seen as rights relinquished by those who opt-in to use CEX rather than DEX.
We can only really take legislators seriously when they balance the discussion of anti-money laundering and anti-terrorism…with citizen rights to liberty and protection from illegal search and seizure. Once regulators begin to understand this delineation between CEX and DEX and how DEX can assure protections against illegal search and seizure, the discussion can continue, and legislation may actually be just and reasonable.
In the discussion of stopping money laundering and terrorism, we must strengthen law enforcement while protecting individual rights to privacy. Crimefighters and liberty defenders should live together peacefully in the same house. So how do we get law enforcement to a place where both harmoniously exist?
It should be acknowledged that we soften law enforcement, actual crime prevention and detective work, when allowing monetary surveillance as a crutch. Focus goes to population surveillance and how money moves — but crime pays, so criminals find other ways to perpetrate evil. “There’s nothing new under the sun.”
Who is to blame when the next big heist, or the next 9/11 takes place? How is this reconciled after excessive government overreach, and at what cost?
In the discussion of stopping money laundering and terrorism, we must also preserve and protect liberty. As Benjamin Franklin said, “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety,” (Franklin, 1755). Regardless of original context, Franklin’s quote applies to more than just tax disputes relating to national defense. I would say it really is a matter of national defense in this context, because monetary surveillance is a short-term and narrow solution in the broader context of diabolical scheming.
Privacy is a human right embedded in constitutions of democratic governments, and correctly focused law enforcement can enforce laws while also preserving citizens’ liberty. So, how do we encourage people to innovate technology that promotes both pillars of this discussion?
For starters, we can get out of the way of the communities of people already innovating solutions. People are already incentivized to correct government overreach. That’s how Bitcoin got started, as a response to the Federal Reserve money printer devaluing citizens’ hard-earned money!
The human desire for privacy rights is illustrated clearly in so many examples, and extremely bright people in various crypto communities have confronted this challenge head-on.
Epic Cash is one example of a crypto community that aims to assure the Satoshi vision of a peer-to-peer electronic cash system with the essential capability of ensuring privacy.
With EPIC, private information such as addresses and amounts can never be stored on the blockchain. First, EPIC’s native chain does not have addresses. Second, amounts are always blinded on the blockchain and are never stored in future transactions. Furthermore, the blinding factor uses the same trusted Elliptic Curve Cryptography (ECC) used in Bitcoin Core. This is undeniably bulletproof security that has never been compromised in Bitcoin, and will continue to be secure in Mimblewimble.
Other chains rely on complicated diversion tactics of less secure protocols that can eventually be cracked. Once cracked, all the information is there on the blockchain for everyone to see. In codework, it is best to reach Turing completion as simply and elegantly as possible. Mimblewimble is simple and elegant, following the tried and trusted ECC. Prior to Mimblewimble, previous attempts at privacy are merely overly complicated Rube Goldberg inventions — rife with single points of failure and vulnerabilities.
With EPIC, the only way to see detailed relevant transaction data is for the user to hand it over, as they would with a friend or at the behest of a valid warrant. Sound familiar? That’s right, this is what makes Epic Cash regulator-friendly because it safeguards self-custody assets from illegal search and seizure, which is so essential to liberty as mentioned above.
In conclusion, lawmakers are facing the new challenge of regulating cryptocurrencies. In doing so, careful consideration must be afforded to civil rights, as much as it is to fighting crime. Banning privacy currencies outright is as ridiculous as banning cash outright. Moreover, it would become a failed attempt at curtailing technical innovation. The only bonus would be for the government coffers — another “fake left, go right” strategy to bilk tax payers.
Elected officials should remember this fact: There are over 16,000 cryptocurrencies and nearly all of them represent communities of real people — voters responsible for electing their representatives.
Epic Cash is one such community. A community of Freemen dedicated to maximum freedom, privacy and liberty for mankind.
Come learn more at https://t.me/epiccash
Referenced Links:
Epic Cash: https://epic.tech
https://www.investopedia.com/pandora-papers-5204914#:~:text=The%20Pandora%20Papers%20are%20a%202021%20leak%20of%20more%20than,companies%2C%20and%20real%20estate%20investments.
https://www.bloomberg.com/news/articles/2021-07-20/eu-proposes-ban-on-anonymous-cryptocurrency-transactions#:~:text=The%20European%20Union%20is%20proposing,money%20laundering%20and%20terrorism%20financing.&text=%E2%80%9CMoney%20laundering%20poses%20a%20clear,said%20in%20a%20prepared%20statement.
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www.brusselstimes.com
JAY-Z - 99 Problems
99 Problems Lyrics: If you're havin' girl problems, I feel bad for you, son / I got 99 problems, but a bitch ain't one…
genius.com
(https://support.dfinity.org/hc/en-us/articles/360057133012-What-is-self-custody-#:~:text=Self%2Dcustody%20is%20a%20means,manage%20your%20private%20key%20personally.)
https://founders.archives.gov/documents/Franklin/01-06-02-0107
Ryan Selkis 2021
if a crypto is truly anonymous then banning it won't matter.