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Can crypto be stopped by a government?

Discussion in 'The Kruse Longevity Center' started by Jack Kruse, Apr 3, 2021.

  1. Jack Kruse

    Jack Kruse Administrator

    Do not be a useful idiot for the media or their corporate partners in government. The plutocrats are using Ukraine to fight off Rus/CCP Petrodollar challenge. Everyone is Bad but Some People are Worse = Brandon/Fed are the enemy.
  2. Jack Kruse

    Jack Kruse Administrator

    The 2nd Amendment of the Constitution is about decentralizing power projection capabilities to prevent the state from Denial-of-Service attacking citizens' private property. To that end, running BTC ASICs at home should be protected under the 2nd amendment.
  3. Jack Kruse

    Jack Kruse Administrator

    It appears the government, through its corporate partners has changed its tune on Bitcoin. BlackRock, $BLK, will now become the primary cash reserves manager of USD Coin (USDC), a $50 billion digital stablecoin asset, pegged to the value of the U.S. dollar.
    Sharon Coste likes this.
  4. ND Hauf

    ND Hauf Pleb

    I saw that come through on a news feed yesterday……still digesting it. Coupled with Yellen’s recent comments….
  5. Law professor Michael Barr, a former advisor to Ripple Labs, which created XRP in 2012, is President Biden's choice to become the next vice chair for supervision of the Federal Reserve. Ripple Labs is the sixth-largest cryptocurrency with a $37.5 billion market cap. Barr had worked in the U.S. Department of Treasury as an advisor to President Bill Clinton and as the assistant secretary for financial institutions under President Barack Obama.

    With the move of Circle’s partnership with Coinbase, USDC becomes the second-largest stablecoin, circulating a supply of 50.6 billion compared to Tether's 82.6 billion – How will Barr weigh in the direction of cypto-currencies?
    • Will he help craft better cypto-currencies laws,
    • move them through fast, slow them down, or
    • just manipulate the players?
    GavinH likes this.
  6. Jack Kruse

    Jack Kruse Administrator

  7. Jack Kruse

    Jack Kruse Administrator

    AML regulations depend on intermediaries to perform the functions of identification, surveillance, censorship, seizure, exclusion, & more. Enter Bitcoin -- a peer-to-peer electronic cash system that lets anyone transfer any amount of value anywhere without intermediaries.

    These AML regulations are really problematic in Netherlands & El Salvador's banking systems even if you buy a car!

    AML regulations break down in the context of cash. With no intermediary to deputize, gov'ts are less able to detect transactions, identify counterparties, determine sources of funds, conduct censorship & seizure, etc. This is true for both paper cash & electronic cash.

    Many gov'ts would love to get rid of paper cash & some are trying. But paper cash doesn't pose that big a risk. Like gold, it only works for in-person transfers & isn't easy to move long distances in large amounts. Regulators are much more concerned about digital transfers.

    For years, regulators have cracked down on digital transfers that use institutions like money transmitters & offshore banks. But aside from the occasional "[country X] bans Bitcoin" headline, most gov'ts haven't tried to significantly restrict Bitcoin or other blockchains.
    There are a few reasons for this. First, gov'ts have been content to regulate on-ramps & off-ramps, partly on the belief that crypto's main utility comes from conversion into fiat. They've been satisfied by limiting access to conversion & catching criminals in the process.
    Second, gov'ts can track crypto transfers via blockchain analytics fairly easily, even supposedly private ones (sorry to break it to you). Third, there really isn't that much criminal activity in crypto, so the overall risk is low & hasn't warranted a ton of gov't resources.
    However, over the last year, Bitcoin has gained geopolitical significance & fiat-pegged stablecoin volume has exploded upward. As a result, gov'ts are getting more concerned about both illicit activity & the threat to their monetary sovereignty (a topic for another day).

    So, what are they doing? For starters, they're enforcing current AML regulations more aggressively. Most of us expected BitMEX to get tagged by the CFTC for unregistered derivatives trading, but it was a big deal to see DOJ turn the case criminal. That doesn't happen often.
    They're also attacking privacy more aggressively. Last week's DOJ Framework described anonymous transactions as "a high-risk activity...indicative of possible criminal conduct." And it had an ominous warning for exchanges about "anonymity enhanced cryptocurrencies" (AEC):
    caroline and ND Hauf like this.
  8. Jack Kruse

    Jack Kruse Administrator

  9. Jack Kruse

    Jack Kruse Administrator

    Perhaps most importantly, policymakers *worldwide* are signaling a desire to expand existing laws to restrict access to crypto. Consider the "Swiss Rule," which practically prohibits self-custody in the guise of verifying the owner of a private key. Switzerland's implementation of FATF's "travel rule" means that Swiss exchanges don't let clients withdraw crypto to personal wallets (unless those wallets have been verified).

    June 2020, the Financial Action Task Force (FATF), an international standard-setting body for AML regulation, said that the "lack of explicit coverage of peer-to-peer transactions...was a source of concern." Soon, they might adopt the Swiss Rule as a global standard. This is another reason pulling your BTC to a wallet is critical.

    I won't bother reciting all the recent gov't statements targeting financial privacy as a major risk. There are too many. The Bank for International Settlements (BIS) said it all in its report on central bank digital currencies last week: "Full anonymity is not plausible."

    ND Hauf likes this.
  10. Jack Kruse

    Jack Kruse Administrator

    I fear we're heading for a world where withdrawing crypto from exchanges to self-custody is restricted as a means of attacking privacy. We'd have two separate crypto markets: one of "clean" custodial coins & another of "dirty" self-sovereign ones, with no bridge between.

    This is a worst-case scenario, to be sure, & all hope isn't lost. Many of us are working to convince policymakers why it's a terrible idea, & I'll have a lot more to say on that soon. But you should know that it's a live issue, & our main challenge for years to come.
    caroline and ND Hauf like this.
  11. JanSz

    JanSz Gold

  12. Jack Kruse

    Jack Kruse Administrator

    There’s a bureaucratic civil war ongoing within the US Government to regulate Bitcoin. In the broadly pro-Bitcoin camp sits the Commodity Futures Trading Commission (CFTC), which takes a favorable stance toward convertible digital currencies. In the trenches on the other side, the Securities and Exchange Commission (SEC) is assembled and making the battle increasingly difficult for the maxis. Gary Gensler has been steadfast in opposition to certain policy decisions that Bitcoin enthusiasts have been pushing for. In 2014, the CFTC determined Bitcoin to be a commodity under the Commodity Exchange Act and has since brought a mix of enforcement actions against clearly fraudulent behavior while also working to develop a legal framework to allow for trading in Bitcoin futures.

    Because of the CFTC’s support and desire to provide regulatory clarity, there exists in the US today a vibrant futures market in Bitcoin. There are even several Bitcoin futures ETFs that trade on the stock market, including the popular ProShares Bitcoin Strategy ETF.
    Since its launch last fall, BITO has traded with a 95%+ correlation to the spot price of Bitcoin, giving retail investors the opportunity to speculate in the digital commodity using their brokerage accounts, as they would any other stock.
    Missing from the suite of US investor options is a direct Bitcoin spot market ETF and getting one approved has been a high-priority goal of the Bitcoin community for years. Given the existence of BITO, why is this an urgent issue for them and why doesn’t one already exist?

    Your government is at war with you and your money. That is why they are gunning for BTC now. BTC represents the anti-

    For answers, we must first understand the critical difference between Bitcoin futures and spot ETFs. Once that becomes clear, the mystery over why spot ETFs are urgently needed – and why Gensler keeps opposing them – becomes apparent.
    While Bitcoin futures contracts reference the price of Bitcoin and can be used to speculate on the commodity, they are settled in cash. The price of Bitcoin is just a benchmark used to facilitate trading between speculators. These futures sit outside the crypto universe.

    When an investor takes a position in a futures contract, they deposit US dollars in their account as margin. So too does the investor on the other side of the trade. As the price of Bitcoin fluctuates, one side wins and the other loses, but everything is settled in dollars.

    At no time do US dollars leave the real economy as a direct consequence of this trade. The winning side collects more US dollars, and the losing side ends up with less, but the direct flow of fiat never enters the crypto universe.
    To be sure, investors making bets in the futures markets may also take offsetting bets directly in the crypto universe, but the futures trades themselves – in isolation – begin and end in totally regulated accounts, complete with thorough KYC/AML protections.
    Now consider the flow of fiat for Bitcoin spot ETFs. These proposed products are designed to buy and hold Bitcoin directly, injecting much-needed US dollars (cough, exit liquidity) into the crypto universe. Inflows to a spot ETF would move US dollars directly into Bitcoin.
    And therein lies the critical difference between the two products, and why, in our estimation, Gensler is blocking these applications. Gary Gensler can be accused of many things but being ignorant of how crypto markets work is not one of them.

    When Gensler rejects these spot ETF applications, he always states that the application “does not sufficiently contest the presence of possible sources of fraud and manipulation in the bitcoin spot market generally that the Commission has raised in previous orders.”

    He also specifically points to “manipulative activity involving the purported ‘stablecoin’ Tether (USDT).” This is remarkably clear language. As long as Gensler is chair of the SEC and Tether is still a thing, there will be no spot Bitcoin ETF, as Grayscale learned this week. The government is going after stablecoins and I believe the reason is they want UST to be the collateral to all stablecoins because it creates a chronic need for US debt. That is how the government plans to keep fiat alive and slow the adoption of Bitcoin globally. They want to protect the hegemony at all costs.

    The Grayscale Bitcoin Trust is a private, open-ended trust that trades on OTC markets under the ticker GBTC. Because shares are created via private placement and there is no redemption mechanism, GBTC can trade far outside of its net asset value.
    At first, GBTC traded at a significant premium to the value of its Bitcoin holdings. Now, it trades at a remarkable 34% discount. One way to solve this problem is to convert GBTC to a spot ETF, which would allow arbitrageurs to work their magic.

    Grayscale applied with the SEC to convert GBTC to spot ETF. They went on a public relations campaign and encouraged Bitcoin enthusiasts to flood the SEC with supportive comments. None of it worked. On Wednesday, Gensler rejected their application.
    Grayscale immediately sued the SEC. It filed a petition challenging Gensler’s decision with the US Court of Appeals, accusing the SEC of acting “arbitrarily and capriciously.” This will take years to adjudicate, and almost certainly harden Gensler’s stance further against conversion until the government gives up its fight against Bitcoin.

    Until the stablecoin issues are dealt with, Bitcoin exchanges around the world firm up KYC/AML, and the crypto universe submits to a regulatory authority, Gensler will never approve a spot Bitcoin ETF. The next two years Gensler will force many hands. He won't be in government past 2024.
    Rocky, ND Hauf, JanSz and 1 other person like this.
  13. Jack Kruse

    Jack Kruse Administrator

    caroline likes this.
  14. ND Hauf

    ND Hauf Pleb

  15. DebraGM

    DebraGM My Quest for True Health

    Gensler’s term expires in 2026. Can he be replaced by a new president in 2024?
  16. Jack Kruse

    Jack Kruse Administrator

    caroline likes this.
  17. Jack Kruse

    Jack Kruse Administrator

  18. Jack Kruse

    Jack Kruse Administrator

    As the cancer of corruption grows in Washington DC, so too does the government’s need to corral the outrage and the activities of ordinary citizens. In this regard, one weapon supersedes them all: the ability to control how ordinary citizens transact in the economy. As Ben Hunt brilliantly describes in his excellent piece In Praise of Bitcoin, the goal of the US government is to see and preside over all the money in the world because once that power is obtained, it’s game over. Here’s a key passage (emphasis in the original):

    That’s really all it is. That’s what Anti-Money Laundering (AML) regulations are all about. That’s what Know Your Client (KYC) regulations are all about. That’s what Report of Foreign Bank and Financial Accounts (FBAR) regulations are all about. That’s what the Treasury-led Society for Worldwide Interbank Financial Telecommunications (SWIFT) is all about. That’s what the Bank Secrecy Act (BSA) is all about. None of these programs are really about taxes. None of these programs are really about catching crooks or fighting terrorists. All of these programs are really about information for information’s sake regarding the greatest source of power in the world and the raison d’etre of every government on Earth: money.”

    Buried in the noise and drama surrounding the ongoing collapse of the crypto sector are disturbing developments in tangentially related technologies that look set to snuff out the last vestiges of individual privacy: central bank digital currencies (CBDCs). Just as the shock of 9/11 was leveraged to roll back basic freedoms in the name of security, so too will the deep criminality exposed in the digital assets space be used to justify a terrifying shift in the way all citizens interact with each other in the economy. What are CBDCs, how close are we to their realization, and why should they be actively resisted?
    caroline, John Schumacher and JanSz like this.
  19. Hopefully, how we resist will succeed.
  20. Jack Kruse

    Jack Kruse Administrator

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