Comment by theturtletalks | Hacker News Reader

Comment by theturtletalks | Hacker News Reader

Parent Full thread

Your comment is quite naive and doesn't understand the damage KYC and AML laws do to businesses. The GUBMINT BAD because they effectively gave financial institutions the right to decide who can do business and who can't. That means effectively deciding the winners and losers. They can ban and deny any company from accepting payments only behind the ruse of KYC and AML laws. They don't have to tell you why (security thru obscurity). Let's take OnlyFans. OnlyFans can accept payments using Stripe and other payment processors. Now try to make your own OnlyFans. The banks say you can't.

Isn't this what laws are for? Selling porn is legal, yet payment processors decide what you can sell online. And to think they don't decide which company can process payment or not, effectively decides who wins. This is where decentralization and CRPYTO GUD comes from. I don't want a few companies deciding what I can sell online, especially if it's legal, and they hide behind KYC/AML laws afterwards.

Just looking at credit card processing fees where we essentially have a rent-seeking fee that will continually increase and is not even refunded to the merchant when a customer returns something. That's the power the government gave to these financial institutions with these laws.

My comment isn't naive - it acknowledges that KYC is part of a series of safeguards against what is an incredibly complex problem, and those safeguards absolutely come at a cost.

The difference between my comment and yours, as well as my comment and the initial post, is that I acknowledge the complexity. You look only at the bad - you don't seem to understand the reason that KYC exists or the value that it provides (and yes, despite the negatives, there is value to KYC rules).

I do understand the good that comes from KYC/AML laws. The intent is obviously good, but you've given financial institutions the power to decide who can sell online. Just search online the countless sellers that are selling perfectly legal things that got caught in this KYC net and are banned from processing payments.

Let's not even get started on the fact that banks have worked with criminal organizations to help them circumvent KYC/AML laws so the people that are money laundering have the know-how on how to not get caught in the net.

The cost of having KYC/AML laws is having a few institutions decide who can sell and what they can sell. The government gave them that power so it's their prerogative to use or abuse it to help themselves. Crypto is simply providing an alternative for people that have been unjustly stopped from processing payments.

It's just as easy to take the mirror argument, though - crypto has been used to transfer money to terrorist groups, and that money has ultimately been used to kill innocent people. If they had been forced to send money through the traditional financial system, whether electronic or cash, it would have been more costly to them either through some loss of money to government seizure or simply the increases costs of evasion and transfer.

> Crypto is simply providing an alternative for people that have been unjustly stopped from processing payments.

It's also a useful tool for terrorists. This is a point of fact.

To be clear, I'm not saying we should get rid of it, just that this is the overly simplistic argument for doing so without considering the positive. Crypto isn't some outright evil, and neither is KYC. Both are parts of complex solutions to complex problems.

I think our argument can be simplified to centralized vs decentralized systems. Ideally, centralized systems are great. 2 parties can trust and work with each other as a 3rd party is the source of truth. Any of the parties can go to the 3rd when they are wronged and need a resolution. It works great, until it doesn't. In our case, the 3rd party has a conflict of interest and can decide if party 1 or 2 can do business at all.

Decentralized, each user takes on more risk, but the benefit is that no one party is deciding who can do business and who can't. That burden is left on the buyer to decide if the seller is legit and the smart contract can be the source of truth.

The difference is that people who support decentralized systems are not trying to get rid of centralized systems altogether. They understand their necessity, but also realize decentralized systems can add some needed competition. That will improve centralized systems in the future as well.

> The intent is obviously good, but you've given financial institutions the power to decide who can sell online.

No.

Financial institutions are bound by their agreements with the card associations, of whom you may have heard; one of their logos is on every card in your wallet. They, as private entities, have the prerogative under current US law to decide who may and may not use the payment rails they own, and this was the original genesis of rules disfavoring porn and other such relatively 'sketchy' businesses - not for moral reasons, or not overtly so, but for the high rate of expensive and complicated chargebacks those businesses generate. The associations can and do deny payment access to businesses or even institutions which generate too many chargebacks, and are thus forced to implement the associations' desires regardless of their own inclinations.

That's been true since long before the USA PATRIOT Act of 2001 gave rise to KYC/AML regulations in their modern form. If you want to argue against one or the other, you help yourself by ensuring you don't conflate them.

Meanwhile, if the description I gave of Visa and Mastercard sounds a lot like how Ma Bell could've been fairly described before a then much spryer Uncle Sam caught up to them, this is not by accident.

Who is Visa/MC to decide what’s a sketchy business? That’s for the law to decide. That would like if a 3rd party company decided who can use the sidewalk or not.

Before you say payments rails are not a public utility, understand that’s a part of the problem. If they were a public utility, the people would have rights. In the old days, the government would nationalize the payment rails like they did the railroads and private roads. Sadly, that won’t happen in today’s age. I’d be happy with the government having their own payment rails anyone can use. The government can go after people actually doing illegal things instead of blanket banning (and then approving) and handing that power to a 3rd party. Since that won’t happen, crypto will have to do.

You may have missed the part where I called for Visa and Mastercard to be broken up as the trust that they are. We differ on the merit of crypto as an alternative, but we don't differ in finding the status quo unsatisfactory.

Oh my bad. You were simply stating that Visa/MC are following the law as the government has instructed them to do so. You’re not supporting that law and just stating it like it is.

No worries; I was oblique in my phrasing, for fear Ptacek might notice what I was saying and weigh in on how I'm full of it. ;)

It's not even so much 'as the government has instructed'. The laws around the associations grew around the associations, with much generous assistance and advice from their own paid lobbyists - much as with the darlings of the modern tech industry, in their day the associations were 'disruptors,' too.

When I say 'under current US law,' what I really mean by it is 'until the Sherman Act is applied as written'. It would be nice to think that might happen in my lifetime, but it has been some years since I could reasonably consider myself young.

Are payment processors hiding behind KYC & AML laws? Do they even need to provide justification?

Yes, you can look up countless stories of small sellers online that have had their payment processing stopped by Stripe or Paypal. In some cases, these are decade old accounts and they keep their funds for weeks after the user is banned. I've even had a friend get banned from Paypal when logged in from another country they didn't operate in. I'm not talking about sending funds, just checking his account. When he asked why, they said their system alerted something and their decision is final.

The government truly made them judge, jury, and executioner. They can stop you from collecting payments at any time, hold your funds, and don't have to provide reasons. Forget appealing their decision since it's final most times.

In the end, the government let this industry "self-regulate" itself and crypto gives users a different option.

That isn't hiding behind these laws though necessarily. I've heard of this from Paypal and I'm sure it happens, on the other hand I'm sure there is lots of abuse and we only ever hear one side of the story.

Reply on news.ycombinator.com