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Comment by andrew_ | Hacker News Reader

> “If cryptocurrency exchanges want to be the banks of the future, we need to make sure people can have confidence in these systems,”

That's all you really need to know about the intent. They see an area where they have little influence, and as "the government" see the need to inject themselves where they aren't wanted. Vipers and leeches, them.

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“The bureaucracy is expanding to meet the needs of the expanding bureaucracy.”

This. And then in a few years, "we've always done it this way." And then the agents of the bureau of expansion will have to meet their metrics, and will unionize, ensuring they get their bonuses and perks.

It’s the same as their influence on the internet; limited and not really effective unless you’re interested in doing everything by the book. China puts a lot of effort into maintaining the Great Firewall, but because of the decentralized nature of the internet, there will always be a way through the restrictions.

I suspect the same will be true of crypto – if you want to be entirely above-board and legit (and want to acquire fiat money), you’ll need to go through a centralized layer with KYC and regulation and consumer protection.

But, like the internet, the decentralized nature of cryptocurrencies means you’ll always have the option to circumvent these controls. If you want to acquire fiat, any such circumvention may be legally precarious, but if you don’t depend on the centralized layer then there’s nothing anyone can do to stop you from transacting with a consenting counterparty.

Basically: let them regulate the space. It will be good for consumer confidence, since 99% of people willingly accept regulation in exchange for protection from FDIC, CFPB, etc.

The centralized layer will benefit those people by mitigating the risk of total wallet compromise (your bank can reverse erroneous charges, and many say that any crypto “bank” needs the same ability to compete). If you want to opt-out of that, you can do so, but at your own risk (financial and potentially legal).

> It will be good for consumer confidence, since 99% of people willingly accept regulation in exchange for protection from FDIC, CFPB, etc.

I think there will be other ways to build "consumer confidence" without relying upon promises from easily corruptible centralized entities who have routinely engaged in moral hazards at scale for the benefit for a few actors above and beyond other actors.

If those centralized entities declare those who try to mitigate against the financial risks in a decentralized fashion for those who do not willingly enter into such risks as illegal, "opt-out" is legally untenable and I will expect increasingly more conflict going forward.

I talked with a guy yesterday about how to build out the on chain swaps market and the current challenges with doing so, who worked for some of these deeply regulated mega banks trading interest rate derivatives for 13 years, and something tells me that these folks (you know, the grunts on the ground who are intimately familiar with how modern money really works and how it can fail on a day to day basis) are going to run circles around around career regulator <-> industry revolving door (and ultimately self serving like anyone else) bureaucrats in dealing with this conflict…

Still though where is the balance between anarchy and big brother? Businesses manipulate people and dodge taxes with crypto. Maybe now it will be harder.

Business manipulate people and dodge taxes without crypto too, and most of it happens in the open and is perfectly legal.

God forbid individuals get in on the tax dodging action!

Also, businesses dodge taxes with crypto? Not impossible, but never heard of that.

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