Nearly 20 million people in America use cryptocurrencies, and if you aren’t one of those people yet, you will be soon enough.
Cryptocurrency ATMs are popping up in corner stores and gas stations all over the nation. Visa, Mastercard, and American Express are investing in cryptocurrency trading platforms and rolling out crypto-rewards credit cards. The Chair of the US Federal Reserve is talking openly about his designs for a state-backed digital dollar. It’s only a matter of time before cryptocurrencies become fully integrated into every aspect of the modern financial system … and that’s exactly what makes the government’s new proposal for cryptocurrency surveillance so dangerous.
An indecent proposal
Cryptocurrencies work by recording every transaction ever made in a publicly-available database called a blockchain, providing cryptocurrency users with verifiable proof of every purchase, sale, and transfer that occurs. In order to protect your privacy, the blockchain replaces your personal information with a digital key. But anyone who can connect your digital key to your real-life identity can track all of your activity on the blockchain.
The US Treasury is currently considering a proposal — officially titled Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets — that will give government agents the power to do exactly that. This new rule will mandate that cryptocurrency exchanges provide your personally identifiable information and your digital key to the government whenever you make large transactions. Once the government has this data, they’ll be able to spy on your spending, no warrant or subpoena necessary.
Think it can’t happen? Think again. In fact, governments all around the world are currently abusing cryptocurrency regulations to spy on the public and silence political dissent.
Different countries, same abuse
Lawmakers in India recently announced new legislation to ban cryptocurrencies and create a state-backed digital rupee. Because India has regulations in place that are similar to the US Treasury’s Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets, the Indian government will be able to identify every person in India who has purchased cryptocurrencies through official exchanges and force those people to sell their digital assets under the threat of hefty fines or imprisonment.
Indian officials were reportedly inspired by the Chinese government’s regulations, which stamped out cryptocurrency trading back in 2018 in order to pave the way for a state-backed digital yuan — complete with government tracking — that was rolled out to the public late last year.
The Central Bank of Nigeria (CBN) recently announced a crackdown on cryptocurrency usage as part of an effort to choke off financial support for political activists who are using bitcoin to crowdfund food, water, medical care, and legal costs for people who have been organizing nationwide protests against police brutality and government corruption.
The Indian, Chinese, and Nigerian governments have all justified these increased financial surveillance programs and human rights violations by claiming that cryptocurrencies are used for money laundering, terrorist financing, and other illicit activities. Don’t believe a word they say. In fact, studies show that cash is far, far more likely than bitcoin to be used for money laundering.
Unfortunately, some US politicians and bureaucrats are repeating these bogus arguments, paving the way for authoritarian cryptocurrency regulations in America.
Coming to America
In her first official comments as Secretary of the Treasury, Janet Yellen attacked cryptocurrencies for their alleged connections to criminal activities. She then doubled down on her comments just a few weeks later. But the Treasury’s own internal files reveal that big banks like JP Morgan Chase, HSBC, and Wells Fargo are the true culprits of widespread financial crimes, helping drug cartels and terrorist organizations move staggering amounts of dirty money in defiance of international law. Janet Yellen certainly knows the truth about money laundering, yet she continues telling lies and stoking fear about cryptocurrencies. Why?
The US government has a long history of conducting surveillance against its people. Nearly everyone in America has been victimized by government spying programs that collect our phone records, Internet activity, emails, and other private information. The Treasury’s new cryptocurrency proposal will expand this invasive surveillance state even further into our personal lives without having any meaningful impact on crime. Make no mistake; that’s by design.
Policymakers at the Treasury must reject Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets and any other rules or regulations that would allow unreasonable government control over the digital currencies we’ll all be using in the years to come. Otherwise, it won’t be long before millions of ordinary Americans like you and me are left vulnerable to government surveillance on every financial transaction we make.
I’d bet my bottom bitcoin on it.