Hacker News Reader

Comment by thebean11 | Hacker News Reader

Even if you take the most cynical approach towards crypto, banning crypto is simply not the governments job.

At best, this is equivalent to banning beanie babies (no real negative affects for society, but stupid and a big overreach).

At worst, it's equivalent to banning the internet (sets the country behind decades as the rest of the world adopts the new technology and profits from it).

View on HN

The government has regulatory authority over monetary policy and currency, so why wouldn't this be the government's job? You might take issue with their decision, but the authority is there.

https://www.occ.treas.gov/

https://www.law.cornell.edu/uscode/text/31/5103

https://www.federalreserve.gov/aboutthefed/fract.htm

Many seem to argue the coins aren't currency but securities, including SEC.

The SEC uses the Howey Test to determine whether a coin is classified as a security or not.

https://www.leewayhertz.com/howey-test/

I think there's a bit more nuance to this than a binary "does" or "does not" have authority. I'm not claiming it's unconstitutional to ban crypto, or that they literally don't have the authority.

I'm claiming it's a bad, authoritarian move that isn't in the interest of their constituents, and is not in the spirit of US laws.

You're free to your opinion, but I see little benefit in a technology for your average constituent that is more expensive than instant payments to move funds, has a highly volatile value (which is an anti pattern of a currency), and provides little to no recourse in the event there is fraud or theft (again, an anti-pattern crypto proponents champion as some sort of feature). One person's authoritarianism is another's properly functioning regulatory environment. If crypto is instead treated as a commodity (Bitcoin), than that and similar crypto tech can be regulated as a commodity by government (which the CFTC and IRS does today).

The US government has the authority to regulate crypto's use as a currency and absolutely should exert that regulatory power.

> I see little benefit in a technology

I disagree that this should ever be a cause for banning something. It's not the government's job to pick and choose which technologies or products will be successful or useful.

The federal reserve is not the government.

As they will tell you a every opportunity they get, they're an "independent" agency.

They’re chartered by Congress and operate under US statute. They are a GSE for all intents and purposes (although I agree they attempt to keep monetary policy at arms length from politicians for obvious reasons), and they’re on the record that they won’t deploy a digital currency without specific legislation permitting it [1].

[1] https://www.nytimes.com/2021/03/22/business/jerome-powell-sa...

Without arguing for or against such a ban - it is literally in the purview of governments. Control and regulation of financial mechanisms is a key part of state sovereignty. So, such a ban would is much more "the government's job" than banning a product like beanie babies.

It's also not the equivalent of banning the Internet; perhaps - similar to banning gambling through the Internet. In the sense that it may be impossible to properly enforce, but can certainly happen and in some world states:

https://www.nodeposit365.com/features/countries-that-have-ba...

Again, none of this is to say cyptocurrencies should or shouldn't be banned; or even that governments should or shouldn't ban things at all, or exist at all etc.

You're right that the political case is easy to make. Governments do already claim the authority to control and regulate these things.

The interesting question about Bitcoin is whether it could ever be robust enough that they couldn't successfully regulate or control it, even if they very much wanted to and most people agreed it would be appropriate for them to do so.

> The interesting question about Bitcoin is whether it could ever be robust enough that they couldn't successfully regulate or control it,

Oh, I doubt that. I mean, if it were banned by most world states, then you wouldn't have reputable exchanges operating legally and openly. So established investment firms and investors would probably stay away from it. And of course, no person or business could officially accept BitCoin, and it would be risky to accept it even unofficially, since it would be admitting to a crime.

The government[0] has regulatory authority over environmental issues, so why wouldn't this be the government's job?

[0] ie: all of them

Banning crypto is a gigantic overreach when the government won't even try the obvious solutions like carbon taxes (which would indirectly discourage crypto mining).

I see the situation in the exact opposite way. Passing a Carbon Tax, while sensible, would run in major opposition because it would basically effect every citizen. But banning cryptocurrency would be much easier since the majority of the population doesn't own any and it can be framed in very positive terms.

> But banning cryptocurrency would be much easier since the majority of the population doesn't own any and it can be framed in very positive terms.

Sounds unrealistic. Remember the war on drugs?

In my personal experience most people think of cryptocurrencies as a Ponzi scheme, some kind of money laundering operation, a tremendous waste of energy, or some combination of those three. In light of that, I think a cryptocurrency ban would be easy for politicians to sell to the public using those terms.

How effective the ban would be is another question, but I am mainly talking about how I think the politicians would justify the ban.

Oh, I didn't realize you only meant how easy it would be to pass the ban. Of course it would be easy to pass a federal ban in the United States, where it's easy to pass many things even when they're extremely unpopular. Marijuana is still banned federally despite well over two thirds of the country opposing the ban!

Usually across-the-board regulation is seen as upholding the free market more than regulation that targets specific individuals or industries.

> But banning cryptocurrency would be much easier since the majority of the population doesn't own any and it can be framed in very positive terms.

How exactly do you ban or confiscate bitcoin? New bitcoin wallets are created without touching the internet access. Internet access is only needed when sending bitcoin but not when receiving bitcoin. By the time someone sends it, it’s too late, you can’t confiscate it because they don’t have it anymore. If the government bans or starts monitoring the bitcoin network for activity, people can still send slips of paper through the mail with the private and public key to one of their wallet.

Combine that with a brain wallet and you can literally store bitcoin in your brain. Try doing that with gold.

> But banning cryptocurrency would be much easier since the majority of the population doesn't own any and it can be framed in very positive terms.

How exactly do you ban or confiscate bitcoin? New bitcoin wallets are created without even touching the internet! It can be done from the middle of the Mojave desert without any proof of it ever happening or existing. Internet access is needed when sending bitcoin but not when receiving bitcoin. By the time someone sends it, it’s too late, you can’t confiscate it because they don’t have it anymore. If the government bans or too heavily monitors the bitcoin network for activity, people can still send slips of paper through the mail with the private and public key to one of their wallets and trade around pieces of paper instead.

Combine that with a brain wallet and you can literally store bitcoin in your brain and pass through borders carrying nothing on hand. Try doing any of that with gold, Euros, Dollars, or Chinese Yuan.

The only thing stopping bitcoin is exponentially higher transaction costs but paradoxically higher transaction costs make small bitcoin holders effectively illiquid. This reduction in supply further drives up the price infinitely until most bitcoin is rendered illiquid or until people think slow cryptocurrencies with high transaction fees are stupid.

The problem with carbon taxes is it affects jobs that can’t easily use less electricity and still produces a lot of jobs/value. The paper and steel industry wouldn’t like carbon taxes high enough to affect Bitcoin. Bitcoin power use is also very easy to move internationally.

Most crypto (I believe currently approx. 90%) is mined outside of the US. Miners have already been moving from China to Iran[1], in part to avoid environmental regulations. As long as there exist jurisdictions that are not party to a carbon tax, crypto mining is highly incentivized to move there. Putting aside the issue of overreach, if the US wanted to reduce carbon, blocking inflows to crypto exchanges would be more impactful than taxing domestic mining.

[1] https://www.nasdaq.com/articles/inner-mongolia-to-shut-down-...

If the government is able to ban crypto currency because it's unnecessary and uses too much energy, couldn't they apply that logic to nearly any other modern luxury?

They do! Gas taxes, bans of gas vehicles, required emission standards, etc.

I think the real solution here is banning coal, natural gas, etc., not the downstream users of it. If I want to mine BTC with 100% nuclear/wind/solar energy, then the problem is solved right?

technically, any process with negative externalities should not necessarily be free of societal (i.e. governmental) limits. All of the "renewable" sources of energy you've mentioned here have some form of negative externality.

of course, in my non-expert opinion, it would be preferable for the government to focus directly on the negative externalities rather than second or third order causes thereof.

Miners pay for the electricity they consume which includes environmental taxes. Why ban them?

I pay 66% taxes on fuel. My car has a $15k tax when sold and $1.5k/yearly tax. In Denmark it would have been much much worse than this (probably north of $30k fees when new).

You don’t ban things you can tax with good results. Banning is for things you can’t tax. It’s a clumsy instrument.

Reply on news.ycombinator.com