EFF to FinCEN: Stop Pushing for More Financial Surveillance

Symmetrically encrypt it and tell the border guard it’s your moms laptop password

You can memorise it, that's still safe

Brain Wallet? You could easily memorize the 24 words.

This is what I don’t get. Great, you can transfer Bitcoin to anyone for cheap, anywhere in the world.

But that Bitcoin is useless to you or whoever you give it to unless it’s converted to currency. That’s where the gov’t puts it’s grip.

Move as much Bitcoin wherever you want. Who cares. Want to convert to dollars or Euros or Yen? That’s where the gov’t steps in and say fine - prove who you are for this transaction. With the public Bitcoin ledger they can now connect you back to the source of the money.

>For example, I've met quite a bit of people that don't want to pay any taxes. Yet they all want for them and their goods to be able to use roads for free, roads that are built and maintained with taxes.

That's a complete strawman and you know it. Any libertarian would say they'd be happy to pay to use privately-run roads.

>No idea why they are not able to understand that both things are incompatible. If there is some option that allows both that I am missing, they didn't manage to explain that.

Privately owned/built roads! These even already exist: https://en.wikipedia.org/wiki/Private_highways_in_the_United.... What's hard to understand about roads being built by people that aren't the government? Yes such roads might not be as optimally placed/efficient, but the libertarian's goal isn't efficiency, it's minimising what they consider the moral injustice of taxation.

While I certainly know people who for whatever reason fail to understand the relationship between taxes and benefits, I don't think they are really at all a significant portion of people who have taxation-related policy objections. The problem is amplified in America because of the long history of institutionalized subjugation and discrimination and the liberal use of violence both at home and abroad are taxpayer funded. Thanks to civil and administrative asset forfeiture that adds up to billions of dollars worth of cash and property seized without the government establishing a link to actual criminality that they can establish probable cause on (or for administrative forfeiture, there's no hearing at all, and they account for $500 million to $600 million a year). In a particularly galling and absurdist sort of way, Americans every day are paying for their own robberies, or paying in part for the settlement they receive after especially egregious cases manage to get past all of the legal hurdles protecting the authorities. Since most victims of what normal people would consider egregious abuse won't even get past that, we're talking about the victims of Chicago PD's systemic Holamn Square torture site and the likes, chipping in, along with their fellow citizens, while the perpetrators received pensions and when needed, covered for each other. All that are your taxpayer dollars at work. In some places, the police, with a hefty chunk of change from the Treasury and DoJ throigh "equitable sharing", are simply more incentized to use that taxpayer money to conduct more no-knock raids, because the war on drugs gets the feds involved which gets the local PD a chunk of federal funding as well. All that come directly from your tax dollars, in many cases far more than what goes into infrastructure.

Your taxx dollars pay for the carceral state, they pay for ICE raids conducted through ruses and guises ordinarily illegal but not in the administrative law context. DHS has a discretionary budget of around $50 billion a year. A similar amount is earmarked for nondiscretionary disaster relief which pretty much lost all meaning lately. Of course, the agencies bring in somme revenue as well, but that's usually even worse news. In July an IG's report fouhnd that the DEA, without legally required congressional oversight, have been profitably laundering money for the cartels for most of the past decade, and had even somehow got involved in buying a private jet that was then left off initial budget reports. Like Aliens v. Predator, whoever wins, we lose, since this is self-justifying behavior, not in the public's interest but to create reasons for their own relevance. Some degree of fraud, waste,and abuse is bound to happen in all bureaucracies, but in America the impact isn't felt evenly. Black and brown parents have to have a second talk with their kids about encounters with the police. Immigrants, documented or not, pay taxes but receive either abbreviated or absolutely no means-t4ested benefits. In spit4e of contributing to the continued survival of social security, they're literally considered second-class citizens subject to indefinite detention. Or, for about a few thousand Americans, you'll experience the exact same because that's about how many Americans get deported a year to god knows where.

And there's plenty of indicators showing that mere spending isn't really sufficient to achieve any of the goals we thought we could just throw taxpayer dollars at. HHS has a $2 trillion budget, almost half of that is used in conjunction with medicaid programs and grants, yet, neither party seems particularly happy with the status quo, not to mention that it excludes 20 million or so immigrants. And we have really convinced ourselves that money can cover up expertise and competency. American farmers are seeing their entire year's revenue coming from subsidies due to the trade war this year. For so many communities in this country, it makes perfect sense to wonder where the tax money go, since frankly it's pretty difficult to see sometimes, and what's most visible sometimes is also the most disturbing, egregious, and kafkaesque one can witness in the system. When that's the vector you interact with what your tax dollars pay for, it's perfectly logically consistent to want actual services yet not want to pay for the abuse. And we don't do public infrastructure stuff well anymore anyway. Think how long it took for the 2nd Avenue subway to go up 3 stations.

Most of your taxes don’t go to things like roads or education.

They go towards bombing brown people in the Middle East, and a smaller portion goes to programs like Medicare.

I’d absolutely pay the subscription for roads, conflict resolution insurance (Justice as a Service), health insurance (deregulated unlike in USA), etc. I never asked for government to violently enforce monopolies in these markets where I live.

This would still leave cryptocurrencies as a valid currency for the criminal underworld, and the points of entry/exit will become stolen/illegal goods/services.

Not taking either side, just pointing out this fact.

There are ways around it - worst case find a bank in some foreign jurisdiction who is willing to play ball.

Paraphrasing another movie quote: "with everyone criminal, no one will be".

Monero priced in Bitcoin is down 60% in the last year and it's down 90% since its peak in 2018.

If Monero's purpose is to be anonymous and untraceable, and Bitcoin's purpose is to be a store of value, then it appears the market prefers the store-of-value use case.

There's a popular idea that crypto currencies are only good for illegal activity. But the evidence so far from a nearly trillion-dollar market says that avoiding law enforcement is not what's driving the crypto phenomenon.

There's another popular idea that central bank money printing is devaluing national currencies when priced in crypto. I'm sure that's part of it, but inflating the money supply by 30% doesn't really justify a 10x increase in crypto valuations.

It's a small sample size, but the handful of wealthy families I'm acquainted with who are investing 0.1% to 2% of their net worth into Bitcoin (and a little into Ethereum) are more afraid of a collapse of the western political order than central bank money printing.

Institutions and high-net-worth individuals aren't looking for privacy for illicit transactions so they're not putting their wealth into Monero.

They've witnessed or researched what the collapse of the USSR did to the ruble and asset prices in the former Soviet Union, and they're buying some insurance against a similar unraveling in the US and Europe.

> enforce things like OFAC and sanctions.

This all the way. Not being able to just reach into your financial affairs would be seen as a huge affront. This is similar to how law enforcement believes encryption is a major impediment to building a case.

Years ago, at a time when money was tight, a bank transfer to my landlord for rent disappeared. OFAC seized the funds. The best reason I can come up with is that my landlord has a Muslim-sounding name (I don't actually know his nationality or religion).

It took many calls to my bank to learn this information. The whole thing was shrouded in messaging that it was delayed and would post "tomorrow," day after day. Finally, someone at a branch had some compassion and spent some time figuring it out.

I received a case number or incident number and was told that I could contest the seizure. A family member helped me cover the rent. I sent a form contesting the seizure and switched to depositing post office money orders into my landlord's local branch, which was a huge inconvenience.

Eventually, I received a letter from OFAC stating some excuse that I can't even remember why my case was moot. This was after maybe six months. I gave up.

It wasn't worth it, to me, to fight the government bureaucracy that I knew would be involved. Sorta like paying a traffic ticket that you know you could beat in court because it's easier than going to court. They can basically do whatever and get away with it by making things a pain in the ass to fight.

Bitcoin has a public transaction record but the parties are nameless. All you see is times and amounts. And cryptocurrency mixers make those not very easy to trace.

Also, "solving" it by doing anything that would only cause criminals to switch to something else that already exists doesn't really solve anything, does it?

> Laundering implies transition from "dirty" to "clean".

But this doesn't really work directly with fiat anyway. If a million dollars suddenly appears in your bank account and the IRS wants to know where it came from, and your answer is "I sold some Bitcoin" their next question is where you got the Bitcoin.

Money laundering works with front companies. Your front company is e.g. an electronics retailer. Your foreign supplier is in on it. You transfer money to them for a truck full of televisions and game consoles, but when the truck comes, it has twice as many as you could ordinarily get for that amount of money because you paid for the rest under the table.

Then you sell the products and get clean money. It used to require a truck full of cash or diamonds going the other way, now it's cryptocurrency. That's what they're complaining about. They used to be able to catch that truck crossing the border with a hundred thousand dollars in cash, now they can't. But you can't stop that by regulating exchanges or anything else that law abiding people are doing.

> If every point of contact between cryptocurrency and a regulated entity requires full KYC, those illicit funds can be prevented from entering the regulated economy.

You can't get there when cryptocurrency is used internationally. The foreign entity selling the criminal organization the televisions isn't subject to KYC regulations in its own country. Or it is on paper but that country's government is corrupt and looks the other way.

It also doesn't actually solve the problem even if you managed to do that. Suppose the cryptocurrency of unspecified origin is prohibited from being used above board in the US. So then it isn't worth as much. Great, then it can be acquired for a lower price; doesn't impact its utility as a medium of exchange. And then the criminals still use it for that and the electronics wholesaler in Russia doesn't really care that the cryptocurrency it receives can only be used in Russia because that's where it is anyway.

All the regulations do is make things harder for people who follow the law.

So much of this feels like someone invented a teleporter and now reactionaries are condemning teleporters because they can be used by smugglers to evade customs enforcement.

But the cat is out of the bag. The smugglers are going to keep using it regardless of what rules you impose on law biding citizens.

Capital Gains Taxes + Inheritance Taxes (more so in the UK) + Inflation means that all wealth is gradually eroded. The stigmatisation is to prevent transactions occurring outside of the taxation and government credit system.

If you’ve seen the real harm that caused in the world by money laundering, you would be less inclined to condemn its prevention.

I’ve personally seen cases of money laundering where the money comes from sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc

These aren’t special one of events, this happens in small bank on every day ending in y. Most fincrime teams don’t have the energy to deal with normal people moving their cash, or even high net wealth people moving their cash. They’re too busy tracking down and cleaning up after some really nasty people.

Is it a bad thing? Maybe taxes shouldn't be a thing, or should be low enough that it's easier to pay them than to dodge them?

One of my problems with taxes is that it's essentially a free, automatically-replenishing pool of money for stupid politicians/government officials to spend recklessly (often prioritizing short-term wins that give them the most political clout) without the "pressure" a typical business in a competitive environment faces to use their money in the most efficient manner possible.

It's still easy to use cash for everything in a lot of countries

Taxes are corrupt. I profited from a publicly funded project in CA and the abuses were atrocious. You should minimize your tax burden as much as possible.

The extreme limits and AML regulations are quite a recent phenomenon.

So if all >1000€ transactions need to be reported, that means that they need to be recorded in an electronic system. That data is recorded for the purpose of sharing with various institutions and agencies, and you do not know who will see that data or how long it will be shared for.

There is basically no privacy for transactions above 1000€.

Worse, that data can be hacked and leaked to the internet. Eg. Criminals will be able to see that last summer you bought an expensive watch, and know that you may be a good target. Such data has often been leaked to the internet before.

There was a recent incident where the sales data for the Ledger cryptocurrency hardware wallet was hacked and leaked to the internet. Including names and addresses of people. I guess this stort of stuff will happen more frequently in the future.

As someone that works in financial crime prevention, I think these rules are a very blunt instrument that will almost certainly do more harm than good.

There have been banks in the past that have operated similar policies, and regulators have raked their senior leaders over the coals for implementing such naive rules.

Transaction size alone tends to be an extremely weak signal for money laundering, but does tend to be a very strong single of high net wealth. Any criminal worth their salt will split up illicit transactions into smaller ones to avoid these types of rules, it’s money laundering 101.

I'm way behind on my news and weak on understanding. I thought I had read that the total number of bitcoin has an upper bound. How can you have interest when there's an upper bound?

> The key thing is ensuring that all exchanges of wealth only occur within a currency controlled by the authorities.

I don’t think even this is a requirement. Really all you need is all large transfers of wealth to be reported to central governments so they can collect tax, and enforce money laundering prevention rules.

Don’t think a government really cares what currency you use, fiat or crypto, as long as they get their cut in a currency of their choice.

What you're describing isn't Bitcoin, but Ethereum, and you can already do a lot of this on Ethereum with stablecoins/ether.

Any dragnet surveillance applied to Bitcoin will apply to other alternative digital currencies as well. If you want a future where people have financial privacy/freedom, you should not welcome dragnet surveillance of any digital currency, let alone the current flagbearer of digital currencies.