EU plans to make Bitcoin transfers more traceable | Hacker News Reader

EU plans to make Bitcoin transfers more traceable

bbc.com

I’m amazed by how short sighted most of the comments here are.

When it comes to large financial operations, society has clearly chosen transparency over privacy. Cause guess what, tax evasion, money laundering, political fixing, terrorism financing are things that exist and really are hurtful to our economies.

Stop fantasizing that the government cares about the shit you buy. This is not about you.

And Bitcoin’s anonymity is not a feature of blockchain and never has been. There is the wallet, but who holds the wallet is not part of the protocol.

You can’t show up in a bank with a bucket load of $100 bills and open an anonymous bank account. Well you shouldn’t be able to with bitcoins either.

> You can’t show up in a bank with a bucket load of $100 bills and open an anonymous bank account. Well you shouldn’t be able to with bitcoins either.

So we have to make a superior system inferior?

well, we had to make the superior system of cash inferior - as just described.

We didnt have to, some chose to.

I never voted for any of those clowns in power

There is currently no political (and therefore I assume public) will to go for privacy over transparency for large money transfers.

You can vote for someone who wants to reverse this, and it might change. Since this is pretty much an international system though (banks offering anonymous accounts will have difficulty interoperating with other actors), it’s likely not enough with political/public opinion in just one country.

I would argue with "society has clearly chosen" statement. The governments are putting more and more strict regulations in place for last decades and they often don't care what the society thinks about those. There used to be a time not long ago when one could show up in bank with a bunch of cash and it would be of no issue. I don't think that terrorism was less important back then.

Do you mean not long ago when the government budget was 1% of GDP? Nowadays it's 40-60%, in developed countries. Large levels of public spending are a choice that we have made as a society, and the spending needs to be funded somehow.

> Large levels of public spending are a choice that we have made as a society

It most certainly isn't a choice we've made democratically.

Rather, it's a case of boiling the frog: a thousand tiny cuts inflicted by elected politicians over the very long term which has slowly led to the monster size leech our government has become.

No, it is a choice that we've made. For example, in Europe spending cuts after the 2007-2009 financial crisis were met with widespread protests.

No, most people are just stupid enough to elect the one promising the most.

Large levels of public spending are a choice made by politicians, not society. Society does only little in regards to politics.

All we do is make a glorified X every few years, allowed to choose between the plague and cancer. All they do is wasting our money and making life worse for everyone except themselves, their peers and the rich. It's like this at least everywhere in the western world.

If the last year hasn't shown you that, and the last decades didn't either, then I don't know what to tell you.

I can't speak for elsewhere, but giant cuts to the largest public expenses (healthcare, public education, social welfare) would just be political suicide here, all but guaranteed loss in the next election.

That’s one of the concerns of groups who prefer government to be no larger than necessary: the larger it is (around 15% of Americans are directly employed), the more self-inflating it tends to become.

> That's one of the concerns of groups who prefer government to be no smaller than necessary: the smaller it is (around 15% of Americans are directly employed) the more self-deflating it tends to become.

I'm a pragmatist. The public sector seems the appropriate vehicle to deliver some things, and not for others.

> I would argue with "society has clearly chosen" statement.

Agreed. IMO, what a society is/does/allows is always up for grabs…

Man made rules aren't laws of physics, and even those are bounded by our understanding/awareness of such.

> The governments are putting more and more strict regulations in place for last decades and they often don't care what the society thinks about those.

Society votes for these governments.

I know, we all would prefer to argue that some shadow cabal decides what the government does and society has nothing to do with it, but at the end of the day it still stands: We vote for these people. We get the government we deserve.

"We get the governement we deserve"

How often have politicians of all countries said and promised to enact or revoke certain policies during their election campaign and then developed amnesia, stalled until outrage dies down or simply shrug until re-election time?

People don't always get the government they deserve.

The greatest ability of democracies is error correction. Politicians lied in the election campaign? Vote for someone else next time. All current politicians lie? Be a politician. That's not easy, but it is possible. I stand by my assertion: We get the government we deserve.

> Be a politician

The point of a system that has large financial and societal pressure at the top to conform to the wishes of specific lobbying interests is that the pressure is so large you either stop being a politician or do what they say. There is no middle ground.

> Society votes for these governments.

It is better to say that society votes. It definitely does, but when every (and I do mean every) politician that gets in power can come right out and say that they won't do anything they promised it is not reasonable to say society voted for the governments they get. Society has governments and society votes, these two are unconnected facts because of an endemic and deeply toxic lack of accountability on the part of politicians. The lies are blatant, so much so that everyone expects them and sees them coming.

society votes for the lesser of two evils, in political systems that are often 2 party races.

> We vote for these people. We get the government we deserve.

So, a poke in the eye, or a kick in the shin? Whatever you get, you deserve..

Isn't transparency in trade and commerce a relatively new practice? Like maybe in the last 100-150 years. Mostly so as a means to collect taxes based on treaties? And there is still very little transparency.

Society can vote with its wallet.

I think that the majority considers the system where a few billionaires can outvote everyone else to be the bad thing we are trying to avoid.

There is no negative vote with a wallet. Only positive and neutral.

This is a feature, not a bug. In the "vote with your wallet" system you only get a "negative vote"—actually veto power—when something directly harms you. Which is as it should be.

It's definitely a bug. In the rare case where something is harmful, there must be a way to vote it down. This avoids rushing to the government to pass laws. Like the right of repair, I want to vote against Apple, not write my senator once a month.

> In the rare case where something is harmful, there must be a way to vote it down.

If you are harmed by it then you get a veto, which is better than merely getting to "vote it down". No action which harms you can legitimately be taken without your consent.

If you are not harmed then your opinion as a mere bystander on whether it is "harmful" is neither needed nor wanted.

I am harmed by having an old phone with removable back panel and battery, but the contemporary market having no meaningful choice of such phones. I'm harmed by having to spend an hour "debloating" every single phone on the planet and still being susceptible to Pegasus.

Even if I purchase a PinePhone, there is no way for me to show the disdain in engineering malpractice of other brands. That is what I mean. Buying a pinephone does not send a message that "I really like the samsung S10 but I wish it had a removable panel." Buying a pinephone instead of a S10 says "I dislike the entirety of the S10 as well as every other phone, without discrimination.". There is no way to vote down specific products short of leaving a review nobody will read. So neutral votes are a bug - you end up giving your money to a corporation either way, so the system is biased to corporations making money.

You definition of "harm" is in dire need of recalibration. Harm occurs when someone else's action infringes upon your exclusive right as (self-)owner to decide how your person or property is to be consumed at any given point in time—or put another way, your right to veto any use you don't care for on the grounds that it would interfere with your preferred use. To say that you are harmed by the absence of a phone made to your precise specifications implies that you think yourself entitled to obtain such a device at a price of your choosing—that you have a right to compel such a trade without regard for what anyone else might want. There is no such right.

A reasonable argument can be made that force in the guise of patents and copyrights (among other restrictions, e.g. licensing of the airwaves and devices that make use of them) is being employed to prevent you from producing your own phone to your liking, and that is indeed a form of harm, but it is also outside the scope of the market. The government won't save you from this; it's the source of the problem.

Misuse of the term "harm" aside, if you want to "send a message" the best way to do that is to… actually send a message. Write the reviews—people do read them—and say what you liked or didn't like about a particular model which influenced your purchase decision. Send a courteous letter to the manufacturer with your comments and suggestions. And let them know that you bought a PinePhone instead as evidence that this was a real issue for you and not a passing fancy. The market data alone might not be enough to say why people are buying the PinePhone instead of the S10, but if Samsung starts losing sales over it they will certainly stop and take notice, and investigate, and revise their plans for the next model.

Of course you can't always get what you want, especially with something as tightly integrated as a smartphone. An S10 with a removable battery, for example, is not really an S10. It would be bulkier, and heavier, and probably not as water-resistant since the case can't be thoroughly sealed. The trade-offs might involve a slower CPU or less RAM or storage. Even just allowing for modularity and customization in the design to suit different needs and preferences has a cost which isn't always worth paying.

The bloatware and user-hostile software design is less excusable, though that gets back to government interference, in the form of copyright, anti-circumvention laws, etc., which manufacturers leverage to shut down purveyors of improved or otherwise modified software derived from the original OEM code.

P.S. There really isn't any conspiracy to keep phones with removable batteries off the market. Battery tech, and availability of public chargers, just improved to the point where people rarely needed to worry about carrying around a spare to swap in when their battery died, at which point the trade-offs of the removable battery option became nothing but a liability.

If society chose transparency over privacy by implanting listening devices in every individual, would that be acceptable?

To me as a privacy-aware nerd, no. That would be a step too far.

To every person who downloads random phone apps and gives them mic permissions, who has Siri or Alexa listening all the time, or who has a Nest doorbell recording their street... probably?

When it comes to small financial transactions, society is at least comfortable people who choose privacy over transparency. Some places have banned businesses from only accepting card/electronic payments, but I'm not aware of anywhere that has banned businesses from only accepting cash.

That said, you're probably right in the long run. Cash is already less convenient, and it's only a matter of time until it's gone. The "transparency" argument will win, for the arguments you've outlined: "tax evasion, money laundering, political fixing, terrorism financing" and anything the government can prosecute under those descriptions. And to add to the list, non-accredited investors having a flutter, people spreading disinformation, people we don't like etc.

It's only transparency for us, big players still have means of privacy.

The gov do care about what you buy.

Last time I checked, “society” is more than the monied class that makes up government and finance. Bizarre that I have to point this out on a site with the word hacker in its name.

It's not bizarre to realize society needs some constraints to function. A computer isn't just a bunch of electrons thrown into a box, much like society isn't just a bunch of people doing whatever they want.

What does this have to do with my comment? Being critical of the government doesn’t automatically make you an anarchist.

What does the “monied class” have to do with anything? Are you suggesting that regular voters would opt against transparency and for privacy? I sure wouldn’t

You are one person and you weren’t asked to vote on it. So yes, the monied classes decided for you.

Every voter is one person and in all parliamentary systems I just vote for representatives/parties that push the opinion I want. This isn’t different from any other issue.

> ... in all parliamentary systems I just vote for representatives/parties that push the opinion I want.

... on perhaps one or two hot-button issues. You won't find any "representative" which actually represents you on more than a few issues (at best), so voters have to prioritize—and then the winners go on to vote on their constituents' behalf on many other issues which weren't major talking points during the elections, in effect representing only themselves.

You're right that this isn't different from (almost) any other issue. It's a real problem for any issue that isn't right at the top of the priority list.

Indeed - you won’t find a party (even in ten-party democracies) that represent you on every issue. In a two party system it’s obviously almost impossible.

If there are 5-10 parties then there is usually at least a neighboring party that you can switch to if your pet issue isn’t correctly handled by the party you regularly vote for. It’s also a lot easier to steer the opinion of a 10-15% party than a 50% party (with the obvious downside that even if the 10% party forms a government, it will be a coalition where it only has 1:5 weight)

Are you really going to switch to another party which is even further from your own position on several issues which are at least as critical just so that you can get some representation (from a fringe party with little actual influence) on an item further down the list?

Any party you choose is going to vote against you interests in some area, abusing your endorsement to back policies you disagree with. The ability to switch to another party which represents you even less apart from one "pet issue" which might not be your highest priority doesn't change that.

> Stop fantasizing that the government cares about the shit you buy. This is not about you.

It’s never about you, until it is. You should assume the government will do the maximum amount of evil given the power they are granted.

This is the classic anti-privacy argument: this isn’t about you, you’re not doing anything wrong, you have nothing to hide, etc.

Sure, there’s a pretty good chance that a random person, e.g. you, isn’t the target of these policies. However, when applied to an entire population, these sorts of policies result in privacy violations on a broad scale.

It's not that you're wrong, it's that the balance of power in the financial system is weighted strongly to the very rich, who own most of the money supply not held by banks and the treasury. Private transactions offer them incredible opportunities to screw the rest of us over.

Fair enough. I see this as a price worth paying for privacy.

Well that, crime, money laundering, terrorist financing and evasion of international sanctions allowing hermit kingdoms to finance nuclear warheads. But half dozen of one, I guess.

So if I give up just this little bit of privacy, all of those concerns melt away to nothingness?

Or is it more likely that I give that away and nothing else really improves?

If you give up some privacy (subject to release with a judge's approval) then we can attempt to reign in bad actors. Deciding that we shouldn't attempt to reign in bad actors is, IMO, a bad call - and one I don't think enjoys broad-based support.

Yes, I think it's worse if North Korea gets a nuke than if the FBI gets a peek at my Amazon purchases pursuant to a judge's order.

I'm not sure if you're being sarcastic, but given that NK already has nukes (and so do tons of other bad actors) I'm not sure what you think you're proving here. We already know this whole "give up your privacy for safety!" thing is nonsense, because the privacy has gone way down over the past years and safety has not changed at all. It's theater, a puppet show put up in order to rob you of your essential freedom for the gratification and enrichment of another.

> I'm not sure if you're being sarcastic, but given that NK already has nukes (and so do tons of other bad actors) I'm not sure what you think you're proving here.

North Korea has leveraged cryptocurrency to evade sanctions to the tune of billions of dollars. [1] This has a material negative impact on global security.

> We already know this whole "give up your privacy for safety!" thing is nonsense, because the privacy has gone way down over the past years and safety has not changed at all.

We are roughly at one of the safest, most peaceful points in history. [2] This is in no small part due to our careful and measured efforts to balance privacy and the public good. Generally you have a right to privacy unless someone can show a good reason why you should lose that right - at least at a state level. I think this is the right balance. I think most people do too.

> It's theater, a puppet show put up in order to rob you of your essential freedom for the gratification and enrichment of another.

Citation needed. And I don't mean that glibly, if you have some data I'll happily read it.

[1] https://www.forbes.com/sites/thomasbrewster/2021/02/09/north...

[2] https://towardsdatascience.com/has-global-violence-declined-...

And now the rich and powerful allow the politicians they own to limit their power by shedding light to their practices?

I kinda doubt the filthy rich will be affected

The very rich also have the tools to dodge all those transparency regulations; and the political power to ensure that the ones they can't dodge, don't get adopted. By and large, all laws and regulations are for the proles.

> It’s never about you, until it is. You should assume the government will do the maximum amount of evil given the power they are granted.

Add to that: don't only think about what the current government will use those powers for, think about what future governments will use them for. If you're not okay with those powers existing when the party you don't like is in power, you should also be advocating against those powers when your own preferred party is in power. (That is, of course, unless you're a fascist and counting on your preferred party to perform a full 1933 Weimar Germany-style takeover that abolishes democracy.)

> You should assume the government will do the maximum amount of evil given the power they are granted.

Why? Shouldn't you then assume that all people will do the maximum amount of evil given the power they are granted. And what exactly makes government different then other places where power is concentrated? For example, crypto miners.

> Shouldn't you then assume that all people will do the maximum amount of evil given the power they are granted.

Not OP, but you definitely should!

> And what exactly makes government different then other places where power is concentrated? For example, crypto miners.

One of them can send people-with-guns to your home to arrest you and take away your stuff.

Note that I'm not some crypto-anarchist absolutist, but IMO being weary and critical of governments grabbing more power is the right reaction.

> You can’t show up in a bank with a bucket load of $100 bills and open an anonymous bank account.

You used to be able to do this at HSBC, and for a very long time, before all these annoying KYC laws

You might still be able to do it in Switzerland?

They will spend a lot of time to make sure you are not a US citizen. At least the big Swiss banks. And frankly any bank that wants to do business with/in the US/EU, or wants to process bankcards.

If you want to launder money there are people for that, they will take your money, set uou5 up with legitimate businesses, put your money into other businesses and over some time those businesses will order a ton of shit from your ones, so you'll end up with a lot of clear after-tax income.

Or, just go to a sketchy OTC desk, drop a burlap sack with a $ on it on their desk. They'll get you some USDT, then you USDT:USD at Coinbase, cash out and you're golden. Need a paper trail? Just sell your buddy an NFT of a cat or something.

Eventually a tax authority will ask where your buddy got the money to buy that NFT. But if your buddy is some random guy from Russia things get easier :)

Funding terrorism and tax evasion are incredibly rare. I mean it, not-credibly rare. The main difficulty in discerning that is legality. Is this person/company evading taxes according to the law. Is this person allowed to purchase $5,000 of Syrian saffron on wish.com?

No, I'm afraid governments already track all data necessary to pursue and convict tax evasion and terrorists. We don't need to sacrifice this new, exciting technology because of bureaucratic laziness and FUD. $800 billion defense + $200 billion law enforcement should be enough to track all dozen suspected domestic terrorists in the USA, and Interpol/Nato/EU share technology with the USA.

> tax evasion are incredibly rare.

It is extremely common where I live, India. To an extent that, going by official statistics, paying tax is rare.

I agree with your second assertion though. The government is tracking more and more transactions by making it mandatory to use tax ID for transactions above a certain threshold.

Since when is Bitcoin anonymous?

Buy one thing with Bitcoin with your shipping address and name and guess what, the seller can back track through the blockchain and knows your entire purchase history and crypto net worth.

Yes, Revil and Co clearly are technically illiterate and chose Bitcoin for their RaaS campaigns because they don't know anything about anonymity

>Stop fantasizing that the government cares about the shit you buy. This is not about you.

Except they fucking do, otherwise I could walk down the road and buy my cannabis from a legal business.

I thought the crypto was born as the ALTERNATIVE to regular fiat money. Therefore it should not be regulated, says the supporters.

Well, transparency works both ways doesn't it? Governments are largely not transparent. If they were, you wouldn't have something like the CIA, Guantanamo bay and the entire surveillance enterprise. I am just quoting the US government as an example but most governments are more or less the same.

Expecting others to be transparent, while governments go on about their private secret activities is very unfair.

Case in point - why hasn't any government adopted any open blockchain till date ? I mean, there are gazillions of operations that the government can use a blockchain for. OK, forget about a blockchain, at least an open distributed ledger ? For instance, all public RFPs and contracts can go on a queryable open distributed ledger. Why hasn't this happened yet ?

Let the governments show a spend log of every tax penny collected and then we'll talk about transparency.

> Well, transparency works both ways doesn't it? Governments are largely not transparent. If they were, you wouldn't have something like the CIA, Guantanamo bay and the entire surveillance enterprise.

Given that the existence of your examples and its horrors is very much common knowledge, at this point it is clearly not an issue of transparency. The people quite simply choose to be okay with it.

A 6700-page report (1) and a Hollywood movie were made about Gitmo. Just like climate change, the issue is not one of knowledge or information.

(1) https://en.m.wikipedia.org/wiki/Senate_Intelligence_Committe...

Bitcoin's goal was to help people "get out" of the traditional financial system "not inside it".

Everyone knows where the real money laundering and terrorist financing happens.

It is done by the likes of HSBC, Standard Chartered and other big banks.

This is public knowledge, as we have seen with the Panama papers and most recently the FinCen files.

Our financial institutions are too rotten for you to even assume that the intention of this regulation is altruistic (i.e public benefit).

The tradition of regulation in finance is to perform a kind of scam called "regulator capture"[0].

It is what we have mostly observed to be the goal of complex financial regulations. For it to divert from this would be an exception.

[0]: https://www.investopedia.com/terms/r/regulatory-capture.asp

"Getting out" is very fuzzy goal. For my understanding people usually cite two central goals:

1. Stop central bank imposed inflation.

2. Serve the people who are excluded from banking.

If either of those goals can't be reached, it is due to misdesign/inherent flaws of the approach and not governments.

> It is done by the likes of HSBC, Standard Chartered and other big banks.

And, as it happens, because of the records, it has been discovered and everyone involved is traceable. The system works.

So where are the consequences?

What do you expect? That I google this for you? Here’s an example: https://www.investopedia.com/stock-analysis/2013/investing-n...

It’s all public knowledge and pretty easy to find.

> Given the bank's size, it appears that it and some of its peers are too big to jail because they are too big to fail.

Instead they got fined for less than 0.1% of their total holdings.

The system doesn’t work. This is not a consequence.

There are no consequences that matter, because the system itself is the problem.

>and everyone involved is traceable. The system works.

The system does not work.

Everyone involved have been discovered by `rouges` like Assange that system holds in jail for either made-up or largely irrelevant accusations, out of the scope of their opus, full soviet style.

Everyone knows the king is naked and just comedians and activists at large (or in jail) has courage to say something about it, which is pretty medieval position for all of us to start with.

You are making a very broad statement and I was able to find this right in the first result from google: “Immigration and Customs Enforcement agents revealed suspect money trails between HSBC's Mexican and United States operations.”

https://www.investopedia.com/stock-analysis/2013/investing-n...

In case of crypto, even the rogues wouldn't be able to do anything.

Funny, right after 1100 crypto money launderers in China were arrested, nobody wanted any more Tethers. [1] Now my statements are entirely circumstantial, but I strongly suggest you watch this space.

> The public security ministry said that by Wednesday afternoon police had busted more than 170 criminal groups involved in using cryptocurrencies to launder money.

> China’s Payment & Clearing Association said on Wednesday that the number of crimes involving the use of virtual currencies is on the rise.

> Because cryptocurrencies are anonymous, convenient and global in nature, “they have increasingly become an important channel for cross-border money laundering,” the association said in a statement.

Sounds right to me.

[1] https://www.cnbc.com/2021/06/10/china-arrests-over-1100-susp...

> nobody wanted any more Tethers

Can you provide a source on that? I certainly don’t want any Tethers but I know plenty of people that do.

The market is the source. Just look at the market cap chart here, you can see that it's been flat for the past few weeks (after a long period of exponential growth): https://coinmarketcap.com/currencies/tether/

Tether market cap tends to grow during bull runs, and crypto's been pretty flat. I'm skeptical of this argument given that Tether is still trading 1:1 with dollars, and at an extremely high volume..

Volumes on USDT:USD pairs should be taken with extreme skepticism, after all, exchanges have a massive vested interest in the peg remaining fixed and are more than likely just arbitraging/wash trading to keep it there. It's hard to know with any sort of certainty how much actual volume is going back and forth across that pair. It also doesn't represent a redemption in any way vis-a-vis the backing assets so can at best be treated as (with a massive lump of salt) some connection to faith that someone else will accept it at 1:1.

Remember only entities Tether deems as customers are permitted to redeem in the first place, and more than likely only the exchanges are deemed customers. They know they can't redeem anyways so they don't bother even trying. That's my read on it anyways.

Even the volume on a more trusted, US exchange like Kraken is pretty high. The fact remains that you could exchange tens of millions of USDT for USD per day with no issues.

Again, the volumes there mean nothing for all the reasons I said - it's not about trusted or untrusted. Binance has 17,000,000,000 USDT. [1] It is in their interests to support the peg, even if they have to go to Kraken to do it. And arbitrage bots participate, too.

Remember, the most trusted crypto exchange, Coinbase, wash traded 99% of all global Litecoin volume for a few months in 2016/2017. [2] And again, "exchanging" means nothing, because it's not a redemption. And the volume likely means nothing because it's probably just arb trades and wash trades.

95% of all crypto trading volume is fake. [3]

Nothing here is regulated. Take everything you see in crypto with a giant lump of salt.

Tether is a criminal enterprise [4], the fact that USDT is trading at 1:1 is an indication the market is completely untrustworthy, irrational or both - not that Tether is trustworthy. Be careful out there!

[1] https://wallet.tether.to/richlist

[2] https://www.cftc.gov/PressRoom/PressReleases/8369-21

[3] https://www.technologyreview.com/2019/03/26/1206/nearly-all-...

[4] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

I think it's a pretty bold stance that one of the largest US exchanges would be wash trading millions a day in Tether. Need evidence for that. Binance and Bitfinex are a whole different animal.

I'm fully aware (and agree with) all your criticisms of Tether, my point is that if I had tens of millions in USDT (as many real people who aren't affiliated with Tether do) I could easily exchange it for USD.

FWIW I didn't mean to say that Kraken was wash trading USDT per se, but that likely other actors are 'holding the peg' at Kraken too by trading back and forth. Maybe aggressive arbitrage would be a better definition?

I agree you could probably clear 10s of millions via USDT:USD pair, but I'm almost 100% confident you could not actually redeem them.

Sorry if I came across harsh btw, I appreciate your thoughts! Tone doesn't always carry well online and I'm actually a pretty positive person haha.

That would be extremely expensive no? They not only have to buy Tether (using currency they can't print at will) to keep the price up, but also pay significant transaction fees.

Totally agree you wouldn't be able to redeem it, I'm just saying the market seems to think 1 USDT = 1 USD. I honestly can't imagine they could keep that peg through manipulation..it would be astronomically expensive.

A flat price certainly does not mean no more people want to buy it, or even that a significant number of people no longer want to buy it

I think parent was referring to a flat market cap, not a flat price, and given the price is $1 a flat market cap does in this case indicate a lack of demand for further issuance.

That's very true, but 'dark money for everyone' doesn't necessarily seem like an improvement.

I am in favor of privacy and not having to explain what you choose to do with your own money, but imho the aggregate yield curve of total privacy inverts as you ascend a logarithmic scale.

Do you have evidence on KYC/AML/CFT being in a state of regulatory capture? I would say they are anything but. Huge expenses for all involved, no standards that would be good enough to just fulfill.

What we have observed is financial institutions failing with respect to KYC/AML/CFT/sanctions etc. (and getting fined for it), but that is not regulatory capture.

Also, I'd argue that since 2008 regulatory capture isn't working so well anymore, with a lot of extra regulation being thrown at the system (some of which being eased now again).

Regulators are incentivized to see dangers everywhere and acting accordingly. The last time they did not see dangers everywhere, it didn't work out so well, either. The counteracting force would come for electorates and policy makers seeing opportunity and progress lost from being overly cautious.

> Everyone knows where the real money laundering and terrorist financing happens.

> It is done by the likes of HSBC, Standard Chartered and other big banks.

> This is public knowledge, as we have seen with the Panama papers and most recently the FinCen files.

No. This is an observational bias. All we know is that they do that. But the fact that they do that, too, does not logically imply that resorting to them is the only way of money laundering and that BTC is not used for that a) at all b) at a much larger scale.

> Everyone knows where the real money laundering and terrorist financing happens.

> It is done by the likes of HSBC, Standard Chartered and other big banks.

This used to be the case. And undoubtedly it still goes on. There simply weren’t many other mechanisms to launder money that didn’t involve large banks…until crypto joined the party.

Crypto’s most popular feature is speculation, and its second most popular feature is money laundering/capital control evasion. These two probably encompass well in excess of 99% of typical real world use cases.

By user count (as opposed to volume), ransomware is almost certainly a bigger use case of Bitcoin than money laundering and friends.

Hackers user crypto for ransomware because they can easily launder the ransom payments.

It's the same side of the coin.

Do you have sources to back up this claim?

I would argue its second most popular feature is purchases on dark net markets. This has been a constant theme since bitcoin was first released and I think is always discounted when talking about the currency.

Is there a way to reliably figure out the GDP of dark net markets?

Kinda; if the dark net markets have known wallet addresses it can be looked up and analyzed in the blockchain. Or if the other public addresses are known, transactions can be deducted from them.

There are some things the government can't realistically do. Like taxing oxygen consumption or preventing people thinking things. Or how they have been totally unable to stop tax evasion for thousands of years.

I'd be more than happy if controlling capital joined the list of things government just can't do. I think freely flowing capital is going to be good for everyone. Good luck to the crypto community & I'm sure a big chunk of the world trying to get away from unreasonable US sanctions will agree.

> I think freely flowing capital is going to be good for everyone.

The US and 'west' is already financially liberal, so we can make an observation: it is NOT good for everyone. Capital flows freely, but it flows upwards. Trickle-down economics is proven false. Advocating for more liberal finances also means being okay with leaving people behind and in the shit; the unemployed, the homeless, the working poor, the huge percentage of people who constantly live one paycheck or one medical issue away from bankruptcy, the people who work 16 hours a day at multiple jobs and still can't make ends meet, etc etc etc.

I mean to rephrase your claim, yeah capital / money should flow freely, but egalitarian. The wealth of an individual should benefit all. The richest countries in the world shouldn't have poverty on an individual level. There shouldn't be a case where a handful of people have more money than half the world population.

And I get it, building a space company and launching yourself into space is cool, but that money could also have gone to your employees to lift them out of poverty and insecurity.

I don't buy the theory that someone else being well off makes me badly off. I also don't buy the theory that someone else being badly off should make me feel bad.

Capital controls aren't going to help the unemployed, the homeless, the working poor, the huge percentage of people who constantly live one paycheck or one medical issue away from bankruptcy. Capital controls will make those problems worse; forcing people to make bad decisions with their investments is not the fast track to getting great long term results.

Some form of capital control is necessary for taxation. Without efficient taxation all of the people you mention are going to be extra fucked.

There are capital controls and then there are capital controls - but preventing you from moving all of your money out of the country to avoid taxes is still a control on capital.

> I don't buy the theory that someone else being well off makes me badly off

You mean the theory of...mathematics? More money in one place necessarily means less money in another.

If I sell a product for 100€ but only pay my worker 20€ to make it, I'm becoming rich. If my worker wants to buy that product, it costs them 5x their salary, but only costs me 1.4x. If all my CEO friends do the same for their products, the workers are becoming poor because of us becoming rich.

Now let's stop trying to be rich. Let's lower the margins and sell the product for 40€. Now it's 2x my salary (marginally worse for me), but also only 2x my worker's salary (much better for them). Let's say all of us CEOs do that. By not being rich, we've allowed our workers to be less poor.

You assume economics is a zero sum game. Which I don't think is even remotely proven.

To not make it zero-sum, money would need to either have to be created in a transaction or somehow raise its value. The former clearly doesn't happen and is a terrible idea and the latter doesn't either and even if it did, it would affect both sides (rich an poor) equally (as a ratio, not absolute) and therefore even widen the gap in purchasing power.

Money is literally created every day. It's exceedingly easy in fact.

Yes, but because the amount in circulation goes up, the value of it goes down. And it's not like the money that is created benefits the poor - it just allows rich people to borrow more probably make even more money from their "investments".

There's plenty of things that cannot be completely prevented, and we don't take that to mean that all counter measures are futile and should be dropped.

Examples are basically any kind of crime and violence, traffic accidents, all kinds of things that harm people and societies.

> There are some things the government can't realistically do. Like taxing oxygen consumption or preventing people thinking things.

Ya think ? People are indoctrinated from as soon as they start school. By the time they reach adulthood they are fully institutionalized.

> I'm sure a big chunk of the world trying to get away from unreasonable US sanctions will agree

You might not agree with every use of US financial might, but I do not think that a “big chunk” of the world are affected by US sanctions or that a big chunk disagree with US sanctions that exist. Most of these sanctions are against demonstrably hostile governments. The US isn’t perfect by any means, but cutting off NK, Iran, etc from international banking to extract nuclear compliance is, I think, a good use of sanctions.

The problem is, if you build a new financial system which facilitates criminal activity such as scams, fraud, extortion, money laundering, tax evasion, terrorist financing, etc., it very quickly gets dominated by the types of people who want to perform such activity, or end up performing such activity ("opportunity makes a thief"). So the options are either to become more and more attractive to criminals and help build up their strength so they can take on the traditional financial system more effectively, or to become more like the traditional financial system and try to stamp out such activity. Personally, and I think most rational people would agree, it would be better for society as a whole if we didn't let the scammers, fraudsters, extortionists etc. win. And I know the typical cryptocurrency supporter's response is going to be "well banks and governments are scammers, fraudsters etc.", but while banks and governments may not have a completely spotless record, the fact is that they are on the whole infinitely more trustworthy than the tiny number of unelected and largely anonymous people who own almost all the cryptocurrency wealth.

I'm sure you have a source that shows that Bitcoin/crypto in general is dominated by things like money laundering and terrorist financing, right?

There's always that one person that questions that claim. Just look around. What goods and services can you actually get in exchange for most crypto? Very little. What is the most common thing ransomware and cybercriminals demand as payment? Crypto.

It's not like it's dominated by it - what makes us the largest part of crypto usage is speculative investors and bots. But as for the rest, it's clearly not normal people buying burgers, that's for sure.

I would like to prove you otherwise with shameless plug of my tweet [1].

[1] https://twitter.com/sergueyz/status/1365041519154061315

The amount of illicit transactioins is higher in bitcoin than in regular cash ($100 bills to be precise). I guess the same is for money laundering - amounts spent in legal transaactions going through current financial institutions will be much higher than money laundering there. And ratio between amounts of legal and possibly money laundering transactions will be higher for regular institutions than for bitcoin.

Precisely because of regulations and their absence.

"Society" has not clearly chosen such thing. Governments LOVE this power, but don't confuse governments with society.

I would also LOVE to see each and every transaction my state does but all I see is high-level budgets with no individual level transactions.

States and state institutions have much much greater "privacy" while the people are heading towards 0 privacy.

I would have expected the reverse to happen first but here we are.

The government most definitely cares about the shit you buy. If they had an infrastructure they would tax you and "nudge" you based on a lot of societal / individual metrics.

I would say the whole purpose of BitCoin was to counter government stupidity so this new regulation continues the trend.

I want to add the other problem of offline wallets getting lost/stolen/destroyed which results in funds being permanently lost/stuck. Is there any solution to this yet?

If I die my estate can be dished out to family members via estate laws and the banks comply with it.. how does one liquidate cryptocurrencies when I die? My family will most likely not be protected in that case and the funds will be stuck forever.

tax evasion: Simplicity the tax system instead. Investigate ways to make it rewarding to pay tax through incentives.

money laundering: focus on catching the actual criminals and stopping real crime instead.

political fixing: privacy tech actually helps here. (Eg Secret ballot)

terrorism financing: terrorists don't need much money. Just a deranged mind, a hand gun or even a sharp sushi chef knife and a social media account are enough.

The goal of bitcoin was to reduce the barriers that traditional financial systems have set in place.

From a 10 year old in the US to a 20 year old somewhere in Africa, bitcoin has no barriers and can be used just like that.

> You can’t show up in a bank with a bucket load of $100 bills and open an anonymous bank account. Well you shouldn’t be able to with bitcoins either.

So no, this statement goes against bitcoin and what it stands for.

How often does the government decide to give back power to the people just out of the goodness of their hearts?

How often does a career politician decide to step aside because someone else has better ideas?

All I'm saying is that there's no optimal solution here, it's all a balance.

I don't want to live in a government mandated box.

One of the biggest problems of the state has always been how to hold power accountable.

I can see a nightmare forming where one becomes a slave to their managerial class. Where everything is tracked and managed. No new ideas can form. No new paths can be taken. Everything is mercilessly beaten down as they don't obey the rules or the standards.

It all leads to stagnation and misery, and a few people making a killing off the backs of the majority.

Sure, very few people want to live in a total anarchy. But giving the state a total control over money and wealth seems like a complete solution to the too much freedom problem.

"society has clearly chosen transparency over privacy"

Instead of society, read political elite.

A random voter cannot choose a politician who is totally aligned with him on all thousand important topics. Much less so in America, a two-party system, where your choice is binary.

As a result, whatever the top brass does with regard to most topics, is what they want, not what society wants.

Notably, big business and important people still enjoy a lot of economic privacy that is being denied to us.

Just note that in my country you can get labelled as an extremist for peacefully opposing Putin, and consequently be cut off all banking services.

Reading western media, I wouldn't rule out the possibility of being labelled as extremist for, say, supporting Trump, and consequently be cut off all services by companies that are owned by his political opponents. Twitter, Facebook, airlines, banks, ...

i can however go somewhere with a bucket load of $100 bills and pay in person

>society has clearly chosen transparency over privacy

This is quite a speculative & ambitious comment..

>Stop fantasizing that the government cares about the shit you buy. This is not about you.

...wot. You assume this is why folks want privacy in their transactions?

>And Bitcoin’s anonymity is not a feature of blockchain and never has been.

Bitcoin is psuedonymous, & always will be.

Let me tell you in an unfiltered way that this is bullshit. I don't care about language. Downvote me or report this if you like but this is literally the kind of bullshit that makes the world a terrible place.

Big money laundering and state wide unethical operations always find a way to operate on the clear financial system. You are probably using some shinny brand device bought from a famous company that contains parts made by slave labor in a certain region of a certain country.

AML/KYC only affect small people. To comply with those regulations is expensive and time consuming and the punishments are heavy so its better to just remove anyone who has a slight hint of suspicious activity.

Because banks are terrified of being punished by governments they will kick honest person out of the system because they've sent money to their mother in some war thorn Middle East country. Thats it. You are banned from the platform with no right to appeal.

For fuck sake. You live in a world where Snowden is a fugitive, Assange is sickened in Jail and the literal criminal Christine Lagarde is the god damn president of the European Central Bank! YOU need to stop fantasizing.

lol

this is woefully inaccurate. Like, seriously wrong. parent comment was on point.

I can tell you, as someone who works in finance, that KYC rules are taken very, very seriously. The bigger the client, the more important they become. There is harsh punishment from both my company if not the government if KYC processes aren't followed correctly. Losing your job is the least of your worries if you're complicit in a case like that.

> The bigger the client, the more important they become.

Yet accountability is so great for big offenders that one day they might preside over the European Central Bank.

> There is harsh punishment from both my company if not the government if KYC processes aren't followed correctly.

And that's why banks will just kick Amir who has only 3000 EUR on his account out of the platform. Why risk such a heavy punishment for a poor bloke?

I invite you to visit the reddit pages for N26, Revolut and similar banks. I don't think those threads about accounts being closed without justification are made by terrorists and money launderers.

> as someone who works in finance

It's big of you to admit, but you'll pardon me if I take what you say with a grain of salt when you tell me the extremely problematic industry you work in definitely is not a problem. You have a vested interest to believe this.

>Stop fantasizing that the government cares about the shit you buy. This is not about you.

Well, it sorta is when this plan applies to everyone.

> You can’t show up in a bank with a bucket load of $100 bills and open an anonymous bank account [..]

Short newsflash:

People can - and do - pay for goods and services in cash.

Sometimes these transactions aren't declared.

If you insist on a written record of your transaction, sometimes the price goes up :)

None of these things are new, they've been going on since very shortly after taxation was invented!

> Stop fantasizing that the government cares about the shit you buy.

While I do think there's a case to be made that it's none of the government's business how many times per week I visit Starbucks, my main concern is big tech companies, banks and insurance companies collecting this information about me, and using it to build a profile based on which they place me into different groups or more or less privilege, offer me different deals, or otherwise manipulate me and my behavior.

> society has clearly chosen transparency over privacy

No more than America has chosen the 1% over 99%; or white lives over black.

The gov says "laundering, terrorism" in the same way it says "terrorism, paedophiles" in other civil liberties cases.

Then explanation of why a government should tax its citizens is usually the fact that those citizens use that countries infrastructure to make money, so that country should take "it's" cut.

But many countries now want to tax CG on cyber currencies that has nothing to do with any of that countries infrastructure. Why should a system of value that exists entirely without the support of the EU require a payment to the EU?

> You can’t show up in a bank with a bucket load of $100 bills and open an anonymous bank account. Well you shouldn’t be able to with bitcoins either.

Why? bills are backed by the country and legal tender as a result - BTC isn't. Bank accounts, and banks themselves, are nationally regulated w/ consumer protections - BTC wallets aren't. How are these two things similar at all?

>Stop fantasizing that the government cares about the shit you buy. This is not about you.

Government cares very much what people buy and worst yet companies care even more.

Believe or not society functioned pretty well before the surveillance zoo and people were able to spend their money without worrying about their privacy. For the 99% of people that aren't money laundering or tax evading, yes the right to privacy is important.

That's why the move to decentralized everything.

This total control nonsense will eventually end and these dinosaur idiots will stuck with their own destructive ideas

I do not really want to discourage this line of thinking, but please note the old fashioned golden rule ( he with the gold makes the rules ).

Apart from that, check crypto trends and quickly you will notice that they are very few projects that care about it in any real way. Every major crypto now effectively all about centralization, not the opposite. For different reasons than the central banks, naturally. Still, the trends are hard to ignore.

Otherwise, we would already have crypto outright banned or fully decentralized by now.

Lots of crypto projects are commercial businesses and this certainly creates conflict of interest toward monetizing and centralization.

However there are more and more truly decentralization projects. Anything that doesn't do KYC when related to crypto trading/exchanging - have to be

99% of crypto ventures are pump-and-dump schemes. Centralized crap pays better in the short term and that's what these projects are after: a quick pump.

Don't focus on the short-term if you want to make serious money or learn a technology that will stick around.

Decentralize everything = make all your transactions visible by anyone

Except this is completely untrue, since there are private cryptocurrencies you can use.

How private are those then? Isn't it true that at least everything is visible to at least all participants?

EDIT: in other words, my question is actually whether your claim has relevance, considering how most crypto currencies aim to be public (or that's at least my impression).

No, you can't see anything, basically. You can only see your own wallet and transactions, and (AFAIK) you can't even see who sent you funds.

So, then how does that technically work? How will integrity be verified/guaranteed?

If it's just an application level shielding, as in a separation between user software that can't access the information but a layer/cluster of infrastructure software that can, then I'm not so sure if its nothing more than rather meaningless cosmetics.

Do you by any change have some references as to how this would work? because I sincerely believe that this statement of "decentralization means access to all" actually fundamentally holds.

EDIT: I'm also doubting the classification of decentralized, if a piece of the user software relies on something else that has more capabilities (essentially a typical trait of centralization).

Sure, there are a ton of resources here: https://www.monero.how/how-does-monero-privacy-work

Zk-proofs

Monero is completely private.

Confidential transactions combined with bulletproofs [0] are an efficient way to deal with the added privacy.

You cannot see who sent you the amount. Blockchain is fully encrypted and you cannot see any amounts or transaction sender/receiver.

0: https://ieeexplore.ieee.org/abstract/document/8418611/

You're assuming that anonymous payments could only be accomplished if there's some private server that knows the plaintext of everyone's balances and just keeps it secret, but that's not the case. There are ways using zero-knowledge proofs or other cryptographic techniques to accomplish anonymous payments in a decentralized way.

In Zcash or Monero, everyone knows the public blockchain and their own private keys. If you make a transaction, it's broadcast to all nodes. There's no special privileged nodes that people give their keys or transaction plaintexts to. Transaction data doesn't contain the sender, receiver, or amount in a way that's clear to the public. The transaction is made so the receiver can decrypt enough to see that they're the receiver and see the amount. The transaction also contains exactly enough information so that the public can verify that the transaction didn't invent any money out of thin air and instead only sent as much as the sender could, whoever they were. (Zero-knowledge proofs can be made to prove pretty arbitrary results over data even to people missing certain inputs!)

You're not wrong, but this is really only relevant if a significant number of users actually treated these systems as currencies. Monero and others are not very popular, because the public transaction metadata of BTC and ETH doesn't matter if it's just a casino.

Certainly, but the GP talked about whether privacy exists, not whether it matters.

“Completely untrue”, this is a mathematician’s answer.

Any real person using DeFi or NFTs is not using a privacy coins

There are also things like Tornado.cash.

That is actually a surprisingly simple yet fundamentally true summation. Thank you.

> This total control nonsense

Also known as taxes.

> these dinosaur idiots

Taxman.

I think it's really funny to see all these people think that they can with crypto game the millennia old system of taxation. Of course any sovereign nation is eventually going to break down any kinds of tax fraud.

A state unable to collect taxes ceases to be a sovereign state.

Arguments over taxation have always led to war, if history is any example… right now people bullish the decentralization narrative are willing to pay taxes to miners/validators/protocols and less so governments.

Eventually this will lead to decentralized warfare with dao's fighting asymmetrically and not playing by the old rules.

You don't need to track all cash flow in society to collect taxes. You do need it specifically for personal income tax. If we, say, taxed property and other monopoly rights more extensively instead (in the vein of georgism), such an arrangement wouldn't be so privacy-invasive. It would also mean that those at the top would have to pay more, though - so...

The UAE and Qatar will disagree. Direct taxation is a thing, and is unavoidable (whether you are using crypto or quantum currencies).

Complex taxation that hides where you paid taxes (ie: VAT) or where your taxes went (ie: infrastructure or old persons pension) is what's at risk here.

Is uniswap really decentralised? I mean it has a domain you can take down

No KYC. It's good enough for now.

You can see you used uniswap for your wallet activity so you are screwed if your wallet address is every audited in the not so distant future?

it's hosted on IPFS and the source code is on GitHub

https://github.com/Uniswap

My understanding was the licensing on the web interface was not liberal

sure, but the smart contract (backend) is deployed on public ethereum blockchain, nothings can stop you from building your own client

So what happens if a US government entity issues Protocol Labs a cease and desist order (they are the YC-funded, Palo Alto California based creator of IPFS)? Do they just roll over and go out of business? The network might be decentralized, but the company and people behind it are not.

What do you expect them to do? Hardcode their clients to ignore that certain CID? That obviously won't work for a whole host of reasons.

That Uniswap UI is out there and literally nothing can stop it.

You can interact with the contract directly on the eth chain. Likewise you can create a new gui/domain to interface with the contract.

If it's a decentralized database then how does it enhance privacy?

Something like Monero or ZCash is decentralised by the same (or similar) means that Bitcoin and Ethereum are however they use various mechanisms to maintain privacy.

Monero uses ring signatures and several other mechanisms to separate a transaction from the sender, recipient, and contents so that you can't reconstruct chains of transactions but you can still verify consistency across the blocks. Monero is reasonably private but it's still technically possible to rebuild some fragments of transaction chains even if it's extremely unlikely.

ZCash on the other hand uses Zero Knowledge Proofs to verify correctness of the blocks and the transactions without leaking information about the system (such as the sender, recipient, or amounts). ZCash is much more computationally expensive, needs to be carefully callibrated, and needs the founding keys to be safely destroyed following the bootstrap of the system to remain secure however it does provide stronger and more easily mathematically verifiable assurances of privacy. "The Ceremony" is a really good one-off podcast about the story.

But in general it is possible to have privacy preserving functionality in decentralised services, it just requires far more complicated maths and lots of statistics to make work correctly.

Cool, thanks for the resources!

> This total control nonsense will eventually end and these dinosaur idiots will stuck with their own destructive ideas

I agree with most of crypto’s philosophy. But this obnoxious naivety makes me root for and materially support the other side.

Is there a word for this?

Contempt? Schadenfreude? Sadism, perhaps?

I really, really want to believe this but I don't think I can. Over the past several years there has been an unquantifiable but subjectively enormous shift in the atmosphere of the cryptocurrency world. At one point it shifted from being about paranoid hackers and techies trying to create a way of doing transactions that was free from trusted third parties to being essentially a space for grifters to shill shitcoins and idiots to buy them. Bitcoin went from being a thing with a radical, revolutionary purpose in the world to being "look, price graph goes up," and this fills me with a deep sense of foreboding.

It increasingly feels like we are in a time when anything with any potential to harm the Regime (such as web, bitcoin, etc) just gets defanged and absorbed into the system. In a few years, your web browser will probably transmit the details of your mandatory TPM chip to facebook, netflix, etc so they can uniquely identify all devices with complete precision and deny access to unapproved (user-controlled) computers. Microsoft already only allows users to install other OSes/bootloaders on new computers by their good grace. The keys are theirs, not yours.

With bitcoin we already have KYC/AML ruthlessly enforced at every onramp/offramp. It is already very hard to transact between fiat and crypto without presenting some form of government-issued identification, and it will only get harder as time goes on, I don't see how you could reverse this process. And that culture shift is important because the people whose voices are most dominant within the "crypto sphere" today don't seem to give a shit, really. The crypto people we have now seem to lack the deep, fundamental commitment to human freedom, privacy, and security that was the animating force behind the creation of bitcoin. I desperately want to believe that it still survives and I'm just not seeing it somehow. But I simply can't.

> The crypto people we have now seem to lack the deep, fundamental commitment to human freedom, privacy, and security that was the animating force behind the creation of bitcoin.

It's probably because the few remaining crypto people, in the space dominated mostly by scammers, realized that crypto anarchy is something that's fun to read about in a sci-fi novel, not something you actually want to live in.

What do you base this on? I know a fair number of crypto OGs and I don't think anyone would agree with that. Sure, we're all tired of the scams and greedy schemes but this too shall pass.

> realized that crypto anarchy is something that's fun to read about in a sci-fi novel, not something you actually want to live in.

I'm a crypto OG, and I also mourn what this space has become. You are entirely incorrect in the last part of your sentence.

Although this appears the be the case with the broader community, in the development space of bitcoin itself the community there appears very serious about tackling privacy, scalability and censorship resistance of bitcoin.

Over time, most of the people shilling "coin go up" memes have lost interest in bitcoin and have moved to other coins, leaving space for this kind of thing to develop in bitcoin.

One: Decentralized exchanges (aka no KYC, limits or restrictions of any kind).

Two: Crpyto-backed smart-contract stable coins (similar to DAI). (aka USD tokens without the need for the US financial on-off ramps).

Then watch this space skyrocket into the stratosphere.

I think decentralized exchanges are cool but they are only useful for people who already have significant crypto holdings. ~nobody gets paid in bitcoin. The initial transfer of fiat for crypto is the most difficult part since that's where the kyc, regulation, etc comes into effect.

I'm not sure what stablecoins have to do with anything i said.

"The new rules would also prohibit providing anonymous crypto-asset wallets."

That's awful. Hosted wallets are an invitation for "exchanges" to steal.

I don't see the full rules but perhaps self-hosted can still be allowed if you do KYC with a central authority to link the address to your identity.

What about generating your own wallet? Are EU citizens required to report that when they do?

I believe that the moment you hold valuable assets (i.e. any value of crypto currency) in any wallet, then you should report that (even now).

I have no idea how these new rules will play out, but I can image how exchanges might be forced allow only transactions with "sanctioned" wallets (i.e. traceable to person), and international exchanges not playing complying being blocked from to the EU market.

Good luck.

In parts of the EU, maybe. That's definitely not the case in the US. Do you generally have to report accounts for which there have been no taxable events?

You don't have capital tax? Here in The Netherlands we pay a tax over assets exceeding some value. If you have a million, whether it's sitting a bank, or it's stuffed in your mattress, you have to report it and pay (a small amount of) tax on it.

Afaik we also don't have taxable events, we just have income tax.

The US does not have a capital tax.

The US does have a realized capital gains tax.

Assets contained within a mattress are not realized capital gains, no matter how much their value increases while sitting there.

No there is no wealth tax, just capital gains. No tax until you sell.

No, sir. I lost all my Monero in an unfortunate boating accident.

> I believe that the moment you hold valuable assets (i.e. any value of crypto currency) in any wallet, then you should report that (even now).

First I hear of that. In Germany, you have to report gains you got from trading/selling (both crypto-to-fiat and crypto-to-crypto), but not simply buying any. Do you have a source?

More specifically, you only have to report gains if you sold within one year of buying

In The Netherlands you have to report the total value (in euros) on the reference date because we have capital tax instead of capital gains tax. I don’t believe that you have to specify your wallet address(es).

I buy a gold watch, do I report that too? I buy a trading card, I bought a shiny jewel. We can keep on going down the rabbit hole here.

Its worth reading the original press release[1]

Relevant section:

"At present, only certain categories of crypto-asset service providers are included in the scope of EU AML/CFT rules. The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today's amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing. In addition, anonymous crypto asset wallets will be prohibited, fully applying EU AML/CFT rules to the crypto sector."

"In addition, providing anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML/CFT rules."

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_...

Edit: More content.

I am a little shocked at the policy and coalition building blindness here:

1) The KYC/AML/CFT burden is high for financial institutions, too, it is not like they want to spend all that money.

2) The efficacy of the measures is not uncontested by academia, regulators, and financial actors.

3) The CBDC discussions tend to have a thread on anonymous wallets, so why not for other things, too? Not like every low value artwork is government registered.

What does not work is open defiance, because if policy wants it can come for "you". Usually easier to go for the person but do not underestimate the effect of committing billions to software disruption either.

There are valid policy and regulatory points to made about what exchanges people should have anonymously and the pendulum on financial regulation is probably just at one of its peaks...

>> The new rules would also prohibit providing anonymous crypto-asset wallets.

Where should I send my Ledger to so i can be a good, obedient citizen and be compliant with this law?

Pretty easy actually: let me give you 0.01BTC, then I'll know what you spend your money on. Forever.

This is not right - pretty much all modern wallet software generates brand new key pairs each time there is a transaction, thereby creating a new address. The unspent utxo's (unspent transaction outputs) are then sent to the new address and the old address can (but shouldn't) be used.

This amounts to little more than trivial obfuscation in practice.

The UTXO "privacy" model of Bitcoin has never worked out, and more modern cryptocurrencies aren‘t even attempting anything like it anymore.

In practice, Bitcoin's privacy model was never even tried though. BTC fees are so prohibitively expensive that no wallet or user would generate more UTXOs or transactions than they have to, making it trivial to trace, yes. But if BTC had been allowed to scale like it was originally designed, then wallets would not fear inputting and outputting potentially hundreds of UTXOs in every transaction of varying amounts so that it becomes practically impossible to trace.

On Bitcoin SV, basically a high-scale version of Bitcoin, there are today several wallets taking smarter approaches to privacy. HandCash's Output Bills [1] for example splits outputs into fixed denominations like cash, and Paymail [2] is a email-like addressing scheme to avoid sharing addresses publicly. I'm sure more approaches will be tried too now that wallets have some freedom to experiment.

[1] https://handcash.medium.com/introducing-output-bills-a-coin-...

[2] https://bsvalias.org/

CSW is a fraud. https://github.com/vbuterin/cult-of-craig

Even if it were technologically superior in some ways, the fact that it's made and run by a "Q"-like LARPer/fraudster figure makes it dead on arrival.

Been hearing this since 2018. Meanwhile

- Cryptofights alone did 600k transactions yesterday https://bsvdata.com

- Hundreds of independent games, social media, wallets, exchanges, tokens, artwork, hackathons in general creativity. https://metastore.app

- Solid user and developer experiences. https://handcash.io, https://moneybutton.com, https://cryptofights.io, https://run.network

- Thousands globally who fly to attend conferences, before covid at least https://coingeekconference.com/en/past-conferences/london-fe...

- Advanced research going into scaling Bitcoin. 50K tps demonstrated publicly, more privately. https://www.youtube.com/watch?v=i3As9-9uSXs&t=224s

- Active community, spread across Slack, Youtube, Streamanity, Twitter, Telegram, and others. Tons of different personalities and beliefs. https://www.youtube.com/watch?v=LAPRWOwam20

Clearly dead though.

you didn't address `"Q"-like LARPer/fraudster figure`

The information is out there for people to make up their own mind. But if you are confident that CSW is larping as Satoshi, let's have some fun and make it a bet.

Thank you because I honestly had no idea what that was referring to and you gave it a lot of colour

Oh man, I'd love to use a betting platform for that if I could. I'd literally bet the vast majority of my net worth in a heartbeat.

Also

>The information is out there for people to make up their own mind.

if this is intended to counter claims of being part of a QAnon-like cult...

When I said "dead on arrival", I meant in my mind it was dead on arrival as something to be considered or humored. I don't think it should be touched with a 50 km pole. In practice, I acknowledge it's not dead in terms of adoption. (Though adoption is still minuscule compared to Bitcoin or Ethereum.)

Similarly, "Q Clearance Patriot"'s predictive ability and insight was dead on arrival in my mind, even if in practice it clearly isn't in the minds of many. So I really meant "should-be-dead on arrival".

Again, it may very well be true that it has legitimate technical merit. But that's orthogonal to the issue of its creator being a notorious, cult-leader-like serial fraudster. That doesn't mean the protocol specification should necessarily be discarded, but it definitely means that particular network and project should be.

The fees are around 1-2 satoshi per byte for the last couple weeks so about $0.04-6 per transaction

But anyone can see the new address to which the utxo's were sent...

38EQT9MqNU6SU7cUdXw9cx2GoRKJi1EhYX

You'll know which addresses i sent my money to. Maybe.

But unlikely you'll know what i bought

Metadata is sufficient.

Approx. $300 USD in Bitcoin seems like a high cost for this expt.

You could be asked to sign a message provided to you by the government. That would be enough.

It's interesting, because normally a bank/exchange would do that for you, but in this case, it's up to you to report which assets you own. The fact that it is possible is the interesting thing here.

> You could be asked to sign a message provided to you by the government. That would be enough.

That would only link you to one particular address.

Modern wallets are typically "hierarchical deterministic" as described in BIP32[1]. They generate new keys/addresses from a seed value as needed. To properly register such a wallet, you would have to provide the root public key from which all addresses can be derived (but not private keys).

[1] https://en.bitcoin.it/wiki/BIP_0032

>The new rules would also prohibit providing anonymous crypto-asset wallets.

As a business/service, or in general? If the latter, then it's literally a ban on cryptography.

You're already not allowed to move undeclared cash across borders, not sure why you can't have a rule that you can't have undeclared crypto wallets. That does not ban cryptography, that just forces people to declare their wallets.

This is completely unenforceable.

For small amounts; large amounts tend to get noticed by what they end up buying, and that’s probably what they care about.

It's very enforceable, in a practical sense, for the majority of holders. Most people use services to exchange crypto for fiat. If you're in the EU, and use any such services, expect changes.

For the people that it isn't enforceable for, they're stuck either moving countries, hodling eternally, or laundering the cash they get in return for their crypto assets.

It's perfectly enforceable by asking exchanges to do KYC.

Yes, you'll be able to break the law if you turn to a hawala payment system, but I can also break the law against murder by hiring a hitman. That doesn't mean laws against murder are completely uneforceable.

Exchanges already do KYC but they don't generally ask you to explain all the crypto transactions that lead to your deposit

I mean, you are allowed to take up to 10k euro in cash with you across borders without reporting it(in the EU anyway), so there is a provision in the law for "small" amounts of money. There is nothing like that here - even if you want to use crypto to send someone 1 euro for something, you will have to register.

The 10K limit is just there to reduce admin cost. A Blockchain can be datained continuously at almost no cost

Call me paranoid but I think governments of the 21st century ultimately want the ability to track every single transaction they can.

Governments of every century wanted that. They just didn’t have the means before.

If you're worried about that then Bitcoin isn't for you. It's not just Governments, anyone can see _every_ transaction as it's in the public ledger.

If that's the case why would they need these regulations? Is the whole exercise just bEUcrats trying to trying to justify their existence?

I'm aware that full ledger visibility is a fundamental part of Bitcoin. I'm actually more concerned that the governments and central banks of the world will push for near total traceability with their own currencies. Whether that comes in the form of "GovCoins" or reporting requirements, I do not know. But I think it is practically inevitable.

the banks are already reporting every transaction, including your personal info

see Common Reporting Standard: https://en.wikipedia.org/wiki/Common_Reporting_Standard

Your concerns likely are legit and justified. It appears indeed what plenty of governments are already working on and pushing towards just that .. and it won't be pretty if they ever manage to convince enough people to make it a mandatory if not the only legitimate way of monetary exchange.

However, I think it's actually the current unregulated crypto currencies ecosystem that should worry people far more. Consider the shady people that operate this space and their ability to mine all kinds of data. People might be surprised how valuable and useful behavioral data of individuals can be, especially when it relates to how they behave when dealing with speculative and uncertain dynamics (like e.g. the realities of crypto currencies themselves). That's all I will say about it.

Why does everyone talk about regulators as if they rule over us rather than answer to us?

Because they do.

And they're almost inevitably corrupt.

Federal Agencies are supposed to be accountable to the people, nothing of consequence ever seems to happen to these bureaucracies when they break the rules or mismanage their operations. Agencies like the VA, IRS, and EPA are notoriously inefficient and have poor service.

That's the whole point, and they've been talking about it since at least the 90s. They're already phasing out cash here in the Netherlands. I can no longer deposit money at my bank, I'm supposed to go hunting for an ATM that takes cash deposits. (It took me a week to find one that wasn't out of service.)

There seems to be an exemption for crypto transfers up to 1K Euro. Source: https://ec.europa.eu/finance/docs/law/210720-proposal-funds-...

Yea I think that's what they are proposing. If your in the EU and move crypto around then you have to register your wallet with you PII with some EU authority?

A crypto wallet doesn’t have a location though. It exists simultaneously on every connected node.

The location is where the secret key is stored. Wallet data is distributed but wallet holders are not.

In any case this kind of thing will be implemented by mandating it at the exchanges where crypto is converted to/from traditional currencies, making it impossible to actually use crypto (legally) without complying.

That definition of location allows for:

* The wallet existing in no places

* The wallet existing in an unlimited number of places

* The wallet spontaneously replicating itself in a new location (with or without information transfer)

Certainly not a very mainstream interpretation of “location”.

There are other systems to exchange fiat for crypto, including but not limited to in person transactions and peer to peer marketplaces.

Peer to peer as in DEXs such as uniswap, sushiswap? They will be more challenging to regulate for sure. I kinda see this regulation and others coming as a way for authorities to keep control of current financial establishment...hence also lot of talk about central bank coins ...very interesting to see how this plays out in next 5yrs

Sure, but in person transactions don't scale well and if you act as an in-person money changer for large amounts of money you are likely to be criminally charged for unlicensed banking or money laundering. Most of the ones I've seen limit exchanges to less than a few hundred dollars to avoid bringing down the hammer on them. (It can technically still be illegal to exchange small amounts, but if the amounts are small authorities are less likely to bother.)

They work for hobbyists messing around with crypto and people who want to buy small amounts of droogs on black/grey markets, but aren't going to allow crypto to be mass adopted.

P2P marketplaces can record an exchange, sure, but how do you actually send or receive large volumes of Euros, Pounds Sterling, or Dollars without casting a "summon police" spell?

> The location is where the secret key is stored.

What does that even mean, lol?

If I put the secret key, in a private dropbox account, do I no longer have to declare the wallet to anyone?

What about if I simply memorize the password?

Its not that simple, to determine where a secret key is stored.

> The location is where the secret key is stored. Wallet data is distributed but wallet holders are not.

That doesn't hold well if you take into account that multisig allows you to require multiple signatures for a transactions and keep the signing capabilities on multiple jurisdictions.

How is this remotely enforceable?

> You're already not allowed to move undeclared cash across borders

Right, because it's generally recognized that countries have the right to protect their borders

> not sure why you can't have a rule that you can't have undeclared crypto wallets

Are you exempt from this if you don't make cross-border transactions? Would it be constitutional for the EU to make a rule that you can't have undeclared cash wallets?

> That does not ban cryptography, that just forces people to declare their wallets.

In the strict sense you're correct. However, I would counter with saying that this isn't a "ban on cryptography" in the same sense recent proposals for key escrow (eg. https://arstechnica.com/tech-policy/2017/11/as-doj-calls-for...) isn't "a ban on cryptopgrahy". However, the end result is the same: you won't be allowed to practice cryptography unless you also give up your secrets to the government.

It’s possible to demonstrate control of a wallet without giving the secrets to the government.

Your cryptographic identity is arguably a secret in addition to whatever the private key is.

>> The new rules would also prohibit providing anonymous crypto-asset wallets.

> As a business/service, or in general? If the latter, then it's literally a ban on cryptography.

There are more applications of cryptography than cryptocurrency, which is why the term "crypto" for cryptocurrency was so unfortunate. It pretty much erased the prior established usages, leading to lots of confusing situations.

This could ban cryptocurrency (the tells are focusing on terms like "assets", "wallets", and using Bitcoin as an example), but it doesn't sound like it bans cryptography (if it did, tells would be "keys", "messages", etc.).

Cash wouldn't be allowed to be invented today.

Cash mostly isn't allowed today, if you are transferring large enough sums of money. Probably for the better.

Source of such bold claim? You can absolutely pay cash for (almost) anything. Even if you're buying a house, you can pay cash if both sides agree to it, and the solicitors check everything is legit and you can prove where you got the money from - but there is completely nothing in law that would prohibit such transaction from happening.

In Spain soon it will be impossible to pay more than 1k in cash. Current limit is around 3k iirc. I guess it's the same in most EU countries.

Not sure why someone downvoted that. In France it's limited to 1000€ currently.

https://www.service-public.fr/particuliers/vosdroits/F10999

Any comment that criticises the EU gets downvoted immediately here.

Link to a news piece commenting the new Spanish law: https://www.rtve.es/noticias/20210630/congrso-aprueba-ley-pr...

I'm not really sure your comment was criticizing anything though, just stating fact. Whether this is good or bad is a matter of opinion. Personally I'm more than happy to see cash disappear since I think it's mostly useful for laundering money and tax avoidance.

It's useful for privacy, which is a basic human right.

It's useful if electronic systems go down. It's useful in an emergency situation. It's useful for donations. It's useful for instant settlement.

You're more than happy to give away your financial sovereignty and to take away your optionality because you think they'll collect more taxes from it?

Financial sovereignty? I'm not sure what you mean exactly, but cash has value just because the states says so. If they ever said it's just paper, the next day it's worth 0. And I don't use cash already so I'm not giving anything away :)

In my country, privacy doesn't include hiding financial transactions from the state. I think they have the right to know everything on this topic, even though cash obviously makes it harder for them (and more expensive for them, so for the tax payer). I don't really see how I benefit from that except that I need to pay more taxes to make up for those who use cash to hide their taxable transactions.

Absolutely agree on the fallback in case of downtime from the payment systems. We'll have to find a good solution to that probably before dropping cash completely. (Note that I never said that cash can/should be dropped right now. They are other missing things, like garantying that anyone can get a payment mean for free)

No, it doesn't. The value of cash is decided by an open market. Crypto is proof enough that all you need is liquidity and a market for something to be exchangeable like cash.

Privacy is a universal human right. Your ignorance of that fact and your state's refusal to accept that is another issue entirely. But history is quite clear about what happens to countries and citizens thereof that continually encroach on private human rights.

This kind of attitude usually comes from people who have not been prosecuted by their government or have not had a family history of it happening to their parents or grandparents. They probably trust their governments to an implicit degree. If you are escaping a 3rd world or 1st world shit hole and you are a target of an authoritarian, murderous regime, cash might be your only life line to get smuggled out of a country and retain your families life.

You don't necessarily want everything under the control of government because government has a repeated history of going really bad, very fast.

Some recent examples: Nazi Germany, Islamic Iran, Communist China, Vietnam, Pol Pot & Cambodia, Soviet USSR, Burma, etc

Absolutely, state trust is obviously a cultural thing and probably depends a lot on your current and past relationships with the state. And yes I trust state were I live. When I compare to the US, one explanation is that in my country, the state pays for security, health and education for example, so it's a win-win relationship (I pay quite a lot of taxes now, but given my family history, I would probably be hard working in the fields for a very low income hadn't the state paid for my education, so I'm happy to pay). In this context it's easier to befriend the state, than when it would happily let you die if you cannot afford a hospital.

As I said in another comment, I think cash is also controlled by the state, so a totalitarian regime which would have issues with it could probably make it worthless anyway, don't you think? (You could smuggle cash from other countries, but cash from your own country wouldn't help too much). Also I'm pretty sure totalitarian dictators are some of the main benefictors (is that a word?) from the lack of traceability of cash.

No it doesn't work that way, because a re-monetization takes a long time and a lot of resources. Why re-monetize when you can use the system already in place?

In Iran, cash still worked and people used it to get smuggled out of the country, even when you were given 5 minutes to get out of your house and see it burn in front of your eyes, or neighbors would steal everything without consequence because you were now parted of a hated minority, you could still get cash via the minority community and family and get out.

If the revolution happened in 2040 vs 1979 iran or 1930s germany, and all finances were controlled by the centralized state via digital accounts, with your minority affiliation tags matched fairly well through a vast adtech apparatus, would those people really have that much to stand on? No, not nearly as much.

In germany during bismarck's time, they created the first welfare state in the 1880s. 30-50 years later the weimar republic, hitler and the holocaust happened. Just because the state is giving you something of value for your money TODAY, does not mean they will continue to do so TOMORROW in your lifetime.

I feel like you don't need %100 total financial surveillance to properly fund a welfare state about honestly minor amounts of cash, but governments are slowly trying to get there. It's very dangerous, and governments are always at risk to go full genocide. The rich use other methods and frauds and almost never use actual cash, other than businesses with a lot of small cash transactions (drugs). I don't think the current surveillance regime is very good for that purpose either.

Large scale criminal behavior is usually enabled by some other governmental policy. The US war of drugs basically funding the narco gang states of northern mexico and creating instability there is a great example of this.

Of course any state can go bad. It's the collective duty of the citizens to make sure that doesn't happen.

I'd be curious to know how cash helps people in china for example. Is it common to have people flee the country with bags of cash? Are there things that you can only buy with cash in order to avoid problems with authorities?

My point is: nowadays, do they need to monitor every financial transactions to be able to control everything you do? If they can know everything you do anyway, what is cash protecting you from?

Cash helps marginalized people in the society everywhere, not just in china. But China specifically has a (large?) number of North Korean defectors, all of whom really need to avoid being found out or they will be sent back to NK. I imagine those people rely on cash to survive.

It's the same elsewhere, be it UK, US or Germany - illegal immigrants rely on cash to survive, as they usually can't just open a bank account with a card. And yeah, some people will always say that it's actually great that illegal immigrants can't access those facilities, after all they are illegal. But I think that's a very cruel view of the world, people in various hardships will always exist and cash is the only fallback that exist if the official banking system rejects you or is inaccessible for you. And it's not just illegal immigrants - people have had their bank accounts closed and placed on some kind of black list by mistake before, how is that going to work if cash is removed entirely? It's already a big problem in most societies, as for instance employers in a lot of places aren't allowed to pay you in cash - so even if you are 100% legit and work a normal job, you suddenly can't be paid legally, even though cash itself still exists and is legal.

On that page that you linked it literally says:

"The payment in cash between individuals (purchase of a car or a painting for example) is not limited. A writing is necessary beyond 1,500 € to prove the payments ."

In fact, even below it, where it mentions the 1000 euro limit for professional transactions:

"Note: this limit does not apply to people who have no other means of payment or no deposit account."

Yes there are exceptions, but the general rule is that payment in cash are limited in amount. I was just illustrating parents comments that having cash payments limited in amount is not science fiction.

Payments over 10K in Cash are already forbidden in most EU countries. There are some exemptions to this rule and Germany and Austria do not have such a law until now. But it is planned to make this an EU wide law. Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_... (EU-wide limit of €10,000 on large cash payments)

Australian government has been unsuccessfully trying to bring this in too. its only a matter of time.

As others have mentioned the EU is mulling an EU wide “ban” of transactions above €10,000.

However most member states already have that in place including far lower limits.

In Greece all cash transactions above €500 have to go through an AML due diligence process which includes a full KYC for both the buyer, seller and any beneficiaries of the transaction.

Basically it’s too much of a hassle to do so businesses simply do not accept cash, so anything from paying for a Hotel stay to buying a Laptop isn’t possible without a mountain of paper work which means it’s impossible in reality.

As an American, that's insane sounding to me. Without financial sovereignty the American revolution would have never happened. And we'd still be ruled by monarchs.

Maybe that's the point? It's hard to be authoritarian if people can rebel. Some EU politicians (Verhofstadt) have been talking about the "European Empire".

It is insane to me to be in discussions like this and see Europeans trust their government more than they trust their mothers. Literally every time in history they've gotten complacent with their governments their governments tried to kill them all, and still they never learn.

You think this is insane? Wait til you find out about who is part of the oh so trusted government.

The ECB president is a convicted criminal charged of financial crimes: https://www.complianceweek.com/imfs-christine-lagarde-convic...

They seem to really miss feudalism.

>In Greece all cash transactions above €500 have to go through an AML due diligence process which includes a full KYC for both the buyer, seller and any beneficiaries of the transaction.

And this applies to trivial things as well, such selling a used bike or laptop to someone?

Yes all products and services.

Whether people actually follow it I don’t know, but if they don’t they are at risk of a felony.

Businesses do follow it.

Legally speaking, no you can't.

Where I'm from basically anything above 1000€ you're legally prohibited from using cash and might be f8ned for it.

Better for whom? Because it's the Wikileaks, Snowdens, and Extinction Rebellions that get hurt by laws like these.

In terms of money laundering for the rich, that's all through 'fine art' and real estate.

Even if visa and the others have stopped doing transactions to Snowden et al., I don't think sending them bitcoin is illegal? It shouldn't matter whether their accounts are anonymous

>I don't think sending them bitcoin is illegal?

Well, according to the EU, not yet.

Seriously, the number of people (maybe some aren't real people, who knows) that are applauding this, I am incredulous. Many of these people probably wouldn't pass up the opportunity to jump into every shit-on-america thread they stumble across to talk about how great privacy laws in Europe are.

I don't think there are any laws preventing that, it's just that businesses may not want to deal with the liability, and it makes you a target.

In practice cash is traced relatively easily.

I recently tried to figure out how to transfer some GBP in to a crypto asset and couldn't find a way to do so without losing 3% or more.

Direct GBP pairings didn't exist, so choices were either go through a USD denominated service or through multiple pairings, losing a high % each time and/or gas fees in uniswap etc.

None of the forex efficient services like Wise or Revolut will wire money to US crypto exchanges.

In the end I didn't bother. People really underestimate how quickly regulators can snuff out mainstream crypto.

I suspect very few American crypto enthusiasts are reporting their gains to the IRS. Who wants to pay taxes right? I guess someone else can pay for the roads and bridges we drive on.

How do you know when you paid enough money for roads and bridges? I mean they don't give you an invoice.

Your comment made me laugh because I thought of those ads for the new GardenHoze 2000 when they switch to b/w and show some pretend moron who pretends to not know how garden hoses work and has all kinds of trouble with them. Morons obviously need the GardenHoze 2000 to solve their garden hose problems! You're the pretend moron who pretends to not know how taxes work.

I doubt there are many people who don't want to pay taxes at all. But I think there are many people (like me) who don't understand why it should be necessary to pay taxes just for owning a specific asset like gold, cash, bitcoin etc..

Hmm the whole way bitcoin is set up is tailored to making this impossible. Anyone can write a wallet program and create a private key.

Of course when converting to Fiat money they have a chance to ask for ID but I don't see this happening with bitcoin to bitcoin transactions unless the whole protocol is changed around.

Ya the Bitcoin protocol won’t allow it but the law can certainly be make it illegal to make anonymous wallets.

No need to change the protocol. It can be done by making unaccounted-for keys unusable, if the regulated industry coordinates. For instance:

- the regulated crypto industry can form a mining cartel that only approves tx between whitelisted addresses and orphans any attempt at doing otherwise (a 51% attack), to save their investment in the "number go up" game.

- the regulated industry can at transaction level reject any output that is not, transitively, formed only of whitelisted addresses. Unapproved transactions could still be mined and used between unapproved participants, but it would cause a split inside the network with a BTC-dark (all contaminated outputs) and BTC-clear (whitelisted only) and an (underground) exchange rate between both would emerge, analogous to some third world fiat currencies with a regulated fixed government exchange rate with say USD that differs from the street rate.

The latter is already emerging in a way with discounts for paying ransomware in monero (which gives an implied xrate between tainted BTC and clean BTC) as a response to the small amount of blacklisting clear exchanges have started doing.

I guess we can route around that with something like BIP47.

If anybody wants to read the fine-print for this proposal: https://ec.europa.eu/finance/docs/law/210720-proposal-funds-...

I think total traceability would be fair, if it was truly total. But the state is gonna scramble all their addresses and transactions, leaving only the citizens unprotected in the open. Otherwise they (the state) themself would become transparent and suddenly people could find out where their tax money actually went.

Corruption anyone?

I guess free promotion for Monero[1]. It's a shame they don't support anonymous smart contracts and don't even plan to.

[1] https://github.com/monero-project/monero

There's secret network

Lots of promise and a lack of delivery from that project.

They sunk tens of thousands of community dollars into i2p integration instead of simply using Tor.

Multi-sig was totally impractical last time I looked.

Can't comment on atomic-swaps though. If that works that would make it useful.

IMO i2p integration was the right choice. I2P actively encourages P2P traffic, while on Tor it would put a lot more load on the more centralized routing nodes.

Also tens of thousands are practically nothing. The general fund currently holds more than 22 millions USD worth of monero.

I disagree for similar reasons the Monereo guys say that Monereo is better than Zcash.

It's easier to hide in the larger pool of users.

> The new rules would also prohibit providing anonymous crypto-asset wallets.

Does that include open source wallets that you can run in your own computer, like Electrum?

your wallet == a BTC address, not the software or hardware you create or access it with

From the actual text of the proposal it seems "wallet" means an account hosted at a Crypto-Asset Service Provider (CASP). Nothing to do with crypto wallets at all, really. These are "Know Your Customer" rules; if you're transacting between two unhosted wallets there is no CASP involved and you are not a customer.

Pretty late and how will they deal with location independent companies like Binance? The CEO is more or less permanently on the lam.

> The CEO is more or less permanently on the lam.

Source?

Binance isn't location independent. They're incorporated in the Caymans.

The EU regularly fines companies that don’t even have a business entity in the EU so I doubt they’re worried about it.

Yes, theoretically. Has it actually happened in practice? Did they pay?

(All cases I can find are either local EU companies or large multinationals who do have boots on the ground in the EU.)

> location independent companies

That’s not a real thing

How is it not? A DAO with with the right setup would require international collaboration to extradite all the members and coerce them to unlock their holdings

Yes sure but most existing crypto players want to be able to drive their Lambo to a nice restaurant in San Francisco or London, not have to live in a cave in Belarus or Haiti as a fugitive from the civilised world.

Well, but not this CEO, and if this site is to be believed, he is just a public strawman. https://scambinance.com/investigations/131-who-owns-binance-...

I'm going to be honest with you but considering last time I've visited SF I'd take a nice Belarusian cave in a heartbeat.

because a company is a legal entity and a DAO is a cryptographic slot machine. A DAO is no more a company than my 10 year old nephew’s gang is a company, although there exist similarly arcane rules, a complex voting system, and a great deal of wishful thinking in both.

Could you turn a DAO into a company? Sure, if you incorporated it, but that requires a country to incorporate it in.

Human beings are not "location independent". They will arrest the humans who run the companies.

All crypto on- and offramps are by definition connected to the regulated banking infrastructure.

If customers can‘t deposit or withdraw money to an exchange, that makes the exchange effectively inaccessible to customers in that jurisdiction.

And this is why monero, zcash etc have and will always be better in the long run.

But BTC is basically the most traceable asset we have in existence lol.

> a company transferring crypto-assets for a customer would be obliged to include their name, address, date of birth and account number, and the name of the recipient

guess what, Mr. Commissionaire? Bitcoin isn't a company and you don't need to ask companies to transfer crypto assets

edit: this just shows how little power they have over the network, so they will tyrannise the middlemen instead

nope but if you want to actually convert your crypto into any good or service or currency that doesn't happen to be crypto, you're going to be rendered legible.

And that alone is going to make tax evasion or laundering a lot harder, and probably makes it a way less attractive asset for criminals.

On the contrary, nothing has really changed here. If you're moving your crypto to an exchange in order to sell it and withdraw euros or dollars or whatever, guess what—you're already in the system. These rules already applied due to the interaction with the traditional financial system when you withdraw your balance. Now the exchange will be required to do the same reporting on the crypto side, but they already had that data. The same goes for moving traditional currency into an exchange to buy crypto. The only areas really affected by the new rules would be exchanges which only involve crypto (e.g. BTC for ETH), direct transfers between customers on an exchange or between exchanges—which aren't actually crypto transactions to begin with even if they are denominated in crypto units—and withdrawals to addresses controlled by parties other than the account holder, which many exchanges didn't permit anyway. (Withdraw to your own unhosted wallet first.)

It's still a huge invasion of privacy etc., completely unjustified and unethical etc., but let's not get too worked up over what seems to me like a fairly predictable shift in which businesses are subjected to KYC/AML regulations. The more reputable exchanges have basically been assuming that these rules applied to them all along. Unhosted wallets and direct transfers between them are unaffected since they don't involve a Crypto-Asset Service Provider. Centralized exchanges were always an awkward stop-gap measure in any case, not a fundamental part of the crypto ecosystem. If this encourages people to trade directly through the decentralized network and avoid CASPs wherever possible, so much the better.

> Bitcoin isn't a company and you don't need to ask companies to transfer crypto assets

You don't need to ask a company to commit a crime you're still going to get punished.....

The vast majority of EU citizen are using some kind of exchange as an onramp and offramp. Those exchanges will do KYC and happily turn over any addresses they send/receive crypto too.

This has a limited time window of being effective as exchanges are a temporary bridge between the traditional system and the crypto economy. In a decade or so you will likely be able to do most things on crypto rails and there will be few choke points left where KYC can be enforced.

There are Swiss services like https://getbittr.com where you just provide an e-mail, your IBAN and an address. You need o sign the address proving that address belong to you but no personal data is sent to the service.

Then can then set a recurring payment for their account and you automatically receive the BTC in your address.

I say this is a good compromise that should make people a bit more satisfied. You didn't needed to send a face mug to the Exchange and on the other end the bank that holds your IBAN already KYCd you into oblivion.

Exactly. This shows how much power they have over the network, because network is comprised of the middle man.

how can it be made more traceable? Everything is already in the ledger.

when you add your private address to every transaction

Bitcoins are not really fungible. There are already services that provide "fresh, minted straight to your wallet with no history" bitcoins, which cost more than normal "used" bitcoins.

Wouldn‘t a coin mixer achieve the same outcome of obfuscating the coins‘ source (if the provider of the service can be trusted and does not run away with the money) in exchange for explicitly tagging them as "somebody laundered these coins"?

So this is just going to apply to exchanges operating inside the EU right? This will only make bitcoin transfers to and from custodians more traceable.

There's likely to be effectively the same law in the US sooner or later

Should apply to anyone interacting with a european bank account

I'm ok with this. Ideally private persons should have an allowance of around 5.000€ (or so) per month in privacy coin usage, where an invoice is the only traceable thing, and everything above that amount should be fully transparent to the authorities (IRS), and pseudoanonymously visible to the public, for journalists to be detectable.

Buy a car? -> IRS can see it. Buy a home? -> IRS can see it. Buy a Smartphone? -> None of anyone's business.

Companies on the other hand should have no such privacy allowance, unless they request and register it with the government and are forced to report any transaction made by them, where the level of detail of the transaction may vary (ie to hide the recipient of a weapons transaction, governments wouldn't approve otherwise, since they like to do shady stuff). The more detail is hidden, the more suspect the transaction will become, but will not appear anywhere public.

I'm not sure how feasible this is, but this would be somewhat similar to the distinction of cash and electronic transactions, with far better control on the amount of spendable cash and a good visibility of the transactions to the IRS.

Another approach I have seen is giving privacy to the spender but not the receiver of money: https://taler.net/en/index.html

The issue with any 'cap' is that the batches just get sharded to be under that cap and you get the 'working from home' style mix of scam and money laundering.

As the sibling links, the answer is anonymity for spenders, but not for recipients of money. This also, ideally, blocks moral panics and instead forces law enforcement to go after cash flow into 'bad activities' and actors.

Sure it will get sharded. But this is a pattern which can be detected, specially if you're not using your opaque money on stuff like groceries and normal day to day stuff.

If you're constantly maxing out your cap and buying normal stuff without that privacy-enabled money, it may well raise eyebrows in the IRS.

It's not a per-transaction cap, but a monthly allowance.

IMO, I should be able to spend a zillion dollars on whatever I want, as long as I'm not buying people it's none of anyone's business.

The way to make sure everyone pays taxes is to tax property, or sales, or do a value added tax. Want a progressive tax? Higher taxes on second properties, or luxury items. Now you don't have any reason to need to know what everyone in the world has or does with their money.

Don't you think it's a bit odd that you have a zillion of dollars to spend? What makes you so much more wealthy than the rest? How did you obtain all this money? Are you sure it is clean money? What makes you so afraid of showing others what really big things you are spending that money on, won't they know anyway? Actually, you're just showing it to the IRS. Do you want to hide something from the IRS? So you are extremely wealthy and don't want the IRS to see on what you spend a zillion of dollars on? I'm pretty sure that Donald Trump would love this as well.

If it's not clean money bust me for the crime, not having the money.

No, I don't want the IRS to see what I spend a zillion dollars on, I don't want the IRS to exist. The comment you're replying to is mostly a sketch of how you pay taxes without some government agency sniffing your butthole.

It isn't about being afraid, it is about what's my business and what's your business.

You can't browbeat people into agreeing with you by comparing them to evil bad man.

Great news for Monero!

Cryptocurrency financial crimes are often masked as a technical issue inherent to decentralized, trustless networks rather than the truth; they are issues inherent to centralized, trustful systems.[a] Transfers within the blockchain are already perfectly traceable. Perfect traceability is the reason for the blockchains being. It is the interface between the blockchains and traditional finance where this problem lies.

[a] The history of finance is the history of financial crime. Jews starting banks because of Christian usury laws, the Medici sidestepping the monetary power of the church and kingdoms, etc.

>The history of finance is the history of financial crime. Jews starting banks because of Christian usury laws, the Medici sidestepping the monetary power of the church and kingdoms, etc.

Most societal advancements are crimes in the beginning as those in power disagree with the new ideas of the subjects. Civil rights, religious freedom, even literacy itself was deemed to be dangerous and unacceptable in their times.

Breaking laws like this and ignoring government bureaucracy is actually quite a noble act and should be encouraged as much as possible.

Human trafficking, illegal arms sales, ransomware attacks every day, one of the world's richest men pumping and dumping a meme coin... no big deal?

It might be that 'most societal advancements are crimes in the beginning' but it doesn't follow that most new kinds of crime are societal advancements.

Even there was no paper money in the whole Wirecard debacle, but there are still 2 Billions missing. So what's the point then.

What about central banks themselves sending bitcoin to each other. Maybe they don’t want to announce to the rest of the world which country they are sending money to. What about dictators of sovereign nations wanting to embezzle money out of their country ? unless there is already a global order, but one with eu running the show instead of the us ? Questionable !

I traced the definitions a bit and it applies to:

" (8)‘crypto-asset service provider’ means any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis; "

"‘crypto-asset service’ means any of the services and activities listed below relating to any crypto-asset:

(a)the custody and administration of crypto-assets on behalf of third parties; (b)the operation of a trading platform for crypto-assets; (c)the exchange of crypto-assets for fiat currency that is legal tender; (d)the exchange of crypto-assets for other crypto-assets; (e)the execution of orders for crypto-assets on behalf of third parties; (f)placing of crypto-assets; (g)the reception and transmission of orders for crypto-assets on behalf of third parties (h)providing advice on crypto-assets; "

which is extremely broad. In particular

'" (14)‘the execution of orders for crypto-assets on behalf of third parties’ means concluding agreements to buy or to sell one or more crypto-assets or to subscribe for one or more crypto-assets on behalf of third parties; "

is the most worrying - it appears to make block generation itself illegal (because of the kyc requirements) on any blockchain that can do anything more than simple transfers (which includes even bitcoin), because every transaction could be a dex swap of some type, knowingly or unknowingly to the block generator.

On the other hand, the additional point is

"Crypto-asset service providers that are authorised to execute orders for crypto-assets on behalf of third parties shall take all necessary steps to obtain, when executing orders, the best possible result for their clients taking into account the best execution factors of price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order, unless the crypto-asset service provider concerned executes orders for crypto-assets following specific instructions given by its clients."

so clearly the intention was to regulate cexes, but the definition language is dangerously broad. If interpreted in the most strict way, it would basically make all blockchains that can't run on anonymous home nodes force every user to kyc - while anonymous home nodes would break the law, it would be unenforceable without China-style network filtering at least.

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CEL...

"Good for Bitcoin" - Bitcoin people

This is actually a great idea because the lack of KYC in cryptocurrency is holding the technology back a lot as no serious financial service company can adopt it

i'm shocked how ignorant these lawmakers are, trying to gain control over a decentralised structure

nobody asked them for this and even if this change ends up in bitcoin's core, it will ultimately fail to reach consensus

our wallets are none of your business, EU, get out!

From the bureaucrat's point of view, all of your assets are "yours" contingent only on the goodwill of the relevant regulations. Parable of the scorpion and turtle; expect neither more nor less.

You will own nothing, and be happy. What are you going to do, rebel against the EU? \s

I'm shocked how naive the DeFi industry was to think they could get away with little to no regulation.

Tech doesn't rule the world. Old power structures are still in place.

DeFi was built with censorship resistance in mind

EU can come up with new laws all day every day, but considering the technical detail, these laws will be impossible to enforce

The laws will be trivial to enforce. Expect to be unable to exchange cryptocurrency (that you own in your wallet) to fiat, which will almost kill the cryptocurrency market for anything other than speculation.

I expect a parallel, dark economy will still be around, where people transact with cryptocurrency and can only exchange it for cash.

It will kill the speculative market. Their native use cases in their own systems will still be 100% viable. If someone uses for example bitcoin cash or miner as money as they're intended nobody can do a thing about it. For those people uninterested in off ramps this means little.

I use it as money as it's intended, to get paid for my work. The supermarket doesn't accept BTC, does that still make it 100% viable?

You better believe I'm going to be paid in USD from now on.

For those people who use it, yes.

I'm not so sure. Unless an EU citizen wants to risk submitting a false tax return under penalty of perjury, any DeFi money that results in a profit has to be reported elsewhere. Your bank will probably also start to ask questions if you do enough DeFi activity. You can probably get away with small transactions, but is it honestly worth the risk?

I don't see this law as impossible to enforce, but rather, difficult to enforce. The government will still try, and most likely succeed in catching several institutions that don't comply. Governments don't actually need thorough enforcement for laws to be effective.

Being easily capable of breaking a law does not mean that the law is unenforceable.

Old power structures get replaced by new tech; politics is downstream from technology.

Banning exchanges may actually accelerate the transition to decentralized finance.

>nobody asked them for this

I very much support the policy. Anonymous money pretty much serves one thing uniquely well which is avoiding the law, sanctions, laundering money, buying drugs or funding crime and I don't think any society has interest in having these markets exist outside of the purview of the state.

would you also support banning words?

it's apparent, that money launderers, drug buyers, criminals communicate using words

What kind of strawman is that? I didn't say I want to get rid of all forms of digital payments, I'm perfectly fine with any form of digital payment system if it is able to comply with basic due diligence required by the law. Anonymous payments stand out in that their only distinguishing advantage is that they make that impossible.

I don't want to ban words and I don't want to ban money. But society very well can demand that there is no shadow financial system that avoids obligations everyone else has to comply with.

society and the EU are welcome to demand whatever they want! :)

the ugly truth is that they have no power over the bitcoin network and their ideas will not reach consensus from miners

that's why they're to attacking the middlemen instead

Bitcoin has no power in the real world. For digital transactions is has some leverage as pure data is much harder to control. Unless people are spending their Bitcoin gainz on Second Life property and not real world assets then regulation targeting the "middle men" is simply common sense.

Crypto is trivial for a functioning government to regulate, until we all live in the Matrix.

Of course they will attack the problem at the weakest point. No one cares about the Bitcoin network itself. I care about my authorities being able to trace large financial transactions at the minimum impact to privacy. If given the terrible choice between no privacy and no transparency for any transactions - I’d vote for no privacy.

I'm not understanding your argument. You are against anonymous money? You realize what the alternative is? Credit cards. Ie you can only transact with visas permission, also they skim some cents off each transaction inflating all prices for all consumers. Have you heard about interest rates before? Because credit cards have the worst interest rate of any financial product. This is what centralized money gets us. The same problems exist in debit cards and fed digital coins as well fyi. Also skimming off the top and controlling how much your savings are worth via monetary policy. But at least little Billy cantbbuy drugs right? Also he has no spare change for the homeless either.

credit and debit cards are rate regulated in the EU to a 0.2% maximum fee and moving money between users these days is usually free completely with almost any payment service or bank account. Cryptocurrency fees are significantly more expensive, and process a fraction of the transactions.

The ability to have a monetary policy is a bonus and it's the reason centralized money is price stable. If you were paid your salary in bitcoin on May 1st this year you would've lost 50% of that at the end of the month, good luck paying your rent

In addition to the original crime and legibility discussion as a practical means of transaction crypto is volatile, expensive and slow.

>Cryptocurrency fees are significantly more expensive

That statement makes no sense. Crypto transfer fees are not a percentage of the transferred amount.

For bitcoin at the moment you have to move around $1300 before the fee is less than 0.2%

And around $2400 for etherium. Which means that in the common use as a payment it will be more expensive. On top of that you get into questionable situations if the shop owner wants to charge differently because of the fee as that is already disallowed for plastic cards.

I use a debit card, I pay zero interest because I hold a positive balance at all times.

Have you looked at fees on crypto "currencies" lately?

I can settle up to about 500k USD in stable coins on Solana for a fraction of a cent with minimal slippage on Orca.so or Saber.so.

The best price my friends could get sending fiat from country a to country b recently was 10 euros (with Wise) other options were 30+ euros. Keep in mind, this was for a few thousand. The fee would go up the higher the amount was.

So, you're a third wave prohibitionist? How progressive!

They don’t need to go after the protocol they can simply put legislation to regulate how exchanges and other services that allow you to trade and easily transfer digital currency operate.

> nobody asked them for this

I'm in favour of regulating and tracing cryptocurrency. I don't think people should be able to sell kiddie porn, bribe officials, scam innocent people or launder money with impunity. I think lots of people would agree with me.

People should be able to transact business among themselves without the government knowing. The ugly comes with the good. It's part of life, personal responsibility.

Criminals by definition do not care how many laws and regulations a honest person has to deal or wrongly go to prison for.

The only thing stunning about this, is how anyone ever could've believed that cryptocurrencies would not end in the dystopian future of a government knowing every single transaction of yours plus being able to confiscate every single e-penny at will.

Optimism and naivety on my part. When I bought a few (legal) things with bitcoin I have acquired from my friend around 2014 I really thought I was living in a better, more free future. Reality only started to dissapoint me more and more from there.

>government knowing every single transaction of yours plus being able to confiscate every single e-penny at will.

That can already happen with or without crypto.

That'll be great for Monero and others.

> The new rules would also prohibit providing anonymous crypto-asset wallets.

When you drill this down, it seems they are really outlawing certain math.

When you drill down, laws against murder are really just outlawing moving various atoms around in specific ways.

There you go.

People have been successfully brainwashed into believing that money transfer is equivalent to murder.

Don't know why you are being downvoted, this is the same case as DeCSS and and AACS. A "crypto wallet" is nothing but a public/private key pair. So... will SSH keys be banned? will sharing a SSH public key be banned? will sharing a program that transforms a public SSH key into a "wallet address" be banned?

The premise is stupid.

The regulators still think they can regulate this stuff. They can regulate you, but only if you let them. What this stuff allows for is that if you want to be unregulated, you can.

Well, Bitcoin and other crypto garbage should be banned. It’s already obvious that it’s mostly used for money laundering and price gambling. It’s very environmentally unfriendly, and non efficient piece of technology.

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