I don't see why transferring money via a cryptocurrency vs cash should be subject to different rules.
It is impossible to report "who" you received an asset from if you received it from a smart contract that is not under the control of any one business or individual. In the cases of most defi contracts, the assets involved are pooled from many thousands of individuals and act as a sort of autonomous market maker.
Cases where criminals obfuscate simple transfers are already prosecuted under money laundering laws, and they are very easy to prosecute because blockchains are a completely open record for anyone to data-mine.
If research into and use of financial smart contracts should be shut down immediately in the US, let them debate and make a law about that. Don't sneak it into a monster bill and pretend that it's about something entirely different.
This doesn't mean it's not under control of someone or a group of people. Claiming it's not under control just means you're hiding the true controller, which might be an embargoed entity like Iran.
If you have to submit a 1,000 long list of people each of whom has a fragment of control, so be it. Or spend a few dollars getting a Delaware corp.
You could probably suceed in arguing that mining was creating the asset.
> literally impossible to comply right?
This has sadly not always been a defense, like jailing women for miscarriage.
> but it's valueless until transacted
That's up for debate, and most people would disagree. Mining/staking revenue is taxed as income when received, not when you sell.
This strikes me like Indiana legislating the value of pi. There exists a natural world out there, beyond human influence, and certain computer programs (particularly ones on Ethereum, where they run on all computers, not one computer) effectively become part of the natural world. The law is set up on the assumption that all actions are ultimately caused by a human or organization, but this may not be a valid assumption anymore.
If I may translate this in to politician speak, you're saying that the Iranian government and other OFAC-sanctioned entities can create autonomous fiscal cyberweapons which cannot be turned off?
(Requires a bit of imagination to do this without oracles, which are obviously a weak spot, but you could imagine having an autonomous bug bounty program that can automatically validate and pay out certain kinds of exploits. Self-funding ransomware?)
If there can be autonomous organizations, there can be autonomous crimes, and that is not a stable situation.
"few dollars"? More like a couple of hundred, some of that on-going and yes, it costs money to shut it down.
And, if you live in CA, you also get to pay $500/year for the privilege of operating a "not CA" corporation in CA, not to mention some other reporting.
This is just the kind of thing that cryptocurrencies need to contend with if they want to be used everywhere. Either they need to comply with the existing financial regulations or become powerful enough that they can change the financial regulations.
Is it though? Putting onerous requirements on something is an excellent de-facto way to effectively outlaw something when there isn't enough political will to directly ban it.
Edit: Look no further than what Texas is trying to do with abortion access. They can't directly outlaw abortion but they can add a bunch of inane requirements that make getting one prohibitive. Alabama continually passes laws that put additional requirements on the staff of abortion clinics and most of them are not reasonable, unless the reason is to make operation increasingly difficult. https://www.prochoiceamerica.org/state-law/alabama/
This is what should happen.
Sure, all transfers are visible in the blockchain, but how do you preserve that information across tumblers and/or associate wallets to tax IDs?
Just because the nature of the software makes it impossible to comply with particular laws doesn't make it good or bad. You need to make a value judgement if the regulation itself is valuable.
Say you take your money put it in a bank account, the bank lends that money out again. Are you responsible for knowing the recipient? No. I imagine the same will be extended to putting money into a swap pool or DEX.
Now say you actually send money to someone over $10k and don't report it. This is just like a 1099.
Honestly, all the fear over what this is going to do is total FUD. It's not that difficult of a rule to deal with for law abiding citizens, and anyone who wants to continue using crypto to launder money or evade taxes will keep using mixer wallets.
My read of this law is that the bank or recipient of your money would be required to make the report (as they are the 'possessor'), which appears to already be the case (so-called KYC laws). I think you may be underestimating the amount of regulatory compliance that the government requires of many businesses.
So my take is they haven't figured out how to regulate the institutional aspect, they're simply attempting to monitor person to person transfers as a first pass. And this makes sense given the wash sales and other tricks people are trying to pull via NFTs and the like.
The bank has a corporate identity which can be held liable.
So what is a liquidity pool? Example one indicated that a person could withdraw coins using tokens he got when he deposited coins.
So pools are something you deposit coins into for LP tokens and later can surrender the tokens for coins.
In example 2, they say that coins received from a liquidity pool swap cannot be traced. Why not? When the liquidity pool received the coins could it not associate the coins with where it came from?
Even if not, then the liquidity pool itself is the source of the coins. When it gets coins, it needs to know who sent it, and when it sends coins it needs to know who it’s sending it to.
All of this is possible. Just because they currently don’t track this information doesn’t mean it’s impossible to track. It would just require adjustments to their business to make it in compliance with regulations.
Transactions on the LP are visible in the ledger, so if you want, you can construct a list of depositing and withdrawing addresses and amounts.
But cryptocurrency is fungible so it doesn't make much sense to try to match up deposit transfers with withdrawals to form some concept of "who paid whom". That would be equivalent to trying to identify who's money I got when I make a cash withdrawal at my bank's ATM.
Edit - To expand this thought: If I exercise my freedom of speech by writing a smart contract and publish the code, how can I be liable if someone else uses that code on an actual blockchain?
6050l should be repealed altogether, not extended to "digital assets". It was wrong when it was first passed and it hasn't gotten any better since.
It'll be interesting to see how this plays out.
Of course I can't speak to what was in "Satoshi"'s heart. But I am convinced that person was a member of the list, and shared the anarcho-capitalist goals/dreams that many of the members had.
More generally, other attempts at digital cash were highly discussed topics in those crowds, and the interest was primarily in the ability to transact anonymously and confidentially, because of what that would do to taxation.
If you're interested in what that crowd was thinking at the time, there's an exhaustive "FAQ" still available, written by one of the more vocal proponents of digital anarcho-capitalism:
The overwhelming culture of Bitcoin now is Number Go Up, which will be tested should US regulators fall more anti-crypto than pro-crypto.
We need the state to abolish markets, only then can we abolish the state.
Doing it the other way round will just result in all of us being slaves to Jeff Bezos.
Speaking for myself, I'm probably closest to mutualism than anything else, and I just don't see how you can have a state that strong that doesn't inevitably lead to stratification and rigid hierarchy.
Conversely, I don't see how markets are the problem. Capitalism is a problem, sure - but capitalism requires the state! To accumulate capital indefinitely, you need abstract property rights, and then you need the state to maintain the registries of who owns what, and to enforce - with violence if need be - the owner's monopoly on the property. Conversely, if the government, or the society at large, simply refuses to acknowledge such property rights, how would Jeff Bezos become himself?
(Yes, ancaps themselves think that removing the state would usher hyper-capitalism, but I don't understand why everybody is so ready to accept that claim while ridiculing most everything else they have to say.)
And maybe it wouldn't be him, but somebody who's shown more propensity for violence, say Erik Prince. If we don't use the state to rob those people of their power first, there will be nothing in their way once we abolish the state.
But the state is just an abstraction. It's the people who are in the way of Jeff Bezos doing something like that. In a centralized state, it's people who are in service of the state - which, in practice, usually means people in service of someone like Jeff Bezos, simply because sociopaths can play the power game better than anyone else. I don't see any fundamental difference between Amazon and the US Government in that regard. The latter is ostensibly democratic, but in practice, representative democracy at best just gives voters the opportunity to back one elite group against the other - so on matters where they're all in agreement (e.g. that elites should have all the effective political and economic power), it doesn't really solve anything.
In a decentralized society, it's organized community that stands in the way. You can argue that it's not strong enough to face someone like Bezos - but, again, Bezos only has the economic power that he has because our government actively protects his concentration of it. If it's not there to do so, how would he acquire the monopoly on violence in the first place? A lone guy with a gun doesn't have a monopoly on violence. A lone guy with enough capital to subsidize a private army might, but that's not possible in a society where capital can't be accumulated indefinitely.
I agree with you here.
> A lone guy with a gun doesn't have a monopoly on violence. A lone guy with enough capital to subsidize a private army might, but that's not possible in a society where capital can't be accumulated indefinitely.
This is where I disagree. He already accumulated plenty of capital and that's exactly the problem. Nothing stopping him from hiring an army with his amazon bucks.
In order to switch to this decentralized society, we need to reset hierarchies, like ones based on capital accumulation first. The only entity I see that would possibly be strong enough to do so is the state.
Now getting it to do so is the tricky part. I'm not sure anything short of a vanguard revolution would do the trick, but vanguards have the unfortunate property of trying to hold on to power after the revolution is done.
https://en.wikipedia.org/wiki/Dual_power#Strategy_and_ideolo...
(Note that crypto meshes really well with this paradigm.)
I will also add that "resetting" accumulation of capital doesn't require any physical acts of violence, either. The only reason why e.g. Bezos owns as much as he does, is because he says so, the government confirms it, and we all collectively accept it as a society. But take that last part away, and it all falls down like a house of cards. And you can't pay for an army with wealth that you don't actually control.
OTOH if you try to "reset the hierarchy" through centralization of power, it just replaces one set of elites with another. Worse yet, the new elites get more tools at their disposal to maintain their dominant position - all while talking about how they're really doing it for the sake of public good etc.
If you're interested, I suggest reading some of Tim May's writings. He was very much a very right-wing anarchist focused on destroying the state, and saw encryption, privacy tech and digital cash as mechanisms to do so. I distinctly recall reading a long essay he wrote explaining why he vehemently disagreed with Kropotkin, if you're looking for a way to distinguish this school of thought from Syndicalists.
(I do not endorse his views at all, my highly simplified view is his philosophy played out in reality ends up being indistinguishable from feudalism. I focus on him because he was a sort of spokesman for that crowd, wrote just a ton of messages and essays over a long time, so there's a huge record of his thought, and he was really smart, well educated, and capable of writing cogently.)
"It's impossible to comply with the ban on murder while we continue killing people" - Yes, that's the point. Stop doing what you're doing.
No need to equate DeFi with murder either, that's just being ridiculous.
There isn't a right to undermine the nation state and maybe, just maybe, the government is for once waking up and doing a useful thing by nipping this in the bud before it becomes dangerous?
This resolves to "there is a right to undermine anyone or anything for undermining your beliefs," because what is and isn't considered a "natural right" is entirely subjective.
If it's not codified in law, it's not a right, it's a feeling.
OPs implicit assertion that undermining nation-states is somehow bad does not have a foundation that is any more stable.
Nor is it obvious at all that there are no other forms that have yet to be tried. Or are being tried - I mean, the Zapatistas are crazy decentralized, but it's not a feudal society, either.
The logical outcome of anarcho-capitalism is feudalism, as people with more money concentrate more and more power with no state to stand in the way. Sooner or later you either do what Jeff Bezos wants or his Prime Forces will see that you are punished. Who's gonna stop them?