Comment by arcticbull | Hacker News Reader

Comment by arcticbull | Hacker News Reader

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Too few people know enough about crypto, and also care enough, for you to get lost in a sea of folks breaking the same law. It'll be a short list of very loud, vocal, easy targets. I'd wanna be as far away from that as I could be.

Especially since a very large use case for crypto - especially in non-custodial wallets - especially people avoiding KYC, is crime.

The ratio of ancaps to criminals on this list is likely very low.

[edit] The real risk of finding yourself on this shortlist of non-custodial wallets is suddenly finding yourself on the wrong side of the IRS.

Most blockchains are pseudonymous, and the government has tools to track and de-pseudonymize, or at least map and aggregate - transactions. If the government wanted to go after you for breaking this law, they'd probably just throw together a quick list of people the IRS should start poking around at.

They know as well as you do that you probably didn't report every transaction you've ever done on every exchange, DEX, or platform. That's tax fraud, straight up. Much easier to prove, and much harder to argue on merits.

I've said this before, and I'll say it again: if your government is coming for you, no amount of magic beans in your computer will keep you or your value safe. If you don't trust your government you've got bigger problems than crypto. If you trust your government crypto is irrelevant.

As Beria, Stalin's side-kick said, "Show me the man and I’ll find you the crime."

I work at a bank and the mountain of anti money laundering / KYC regulations we have to deal with is mind-boggling. I’m not surprised that such a law is coming especially since in my view, the decentralized nature of crypto makes money laundering even easier.

Even if you kept a blacklist of wallets with dirty money, I think it would be possible to spin up a chain of brand new wallets and quickly funnel coins through them before the blacklist could keep up in a way that would be impossible with fiat transactions and traditional banks. I could be wrong though, maybe someone’s got an algo for that.

Opinions my own.

> especially since in my view, the decentralized nature of crypto makes money laundering even easier.

This barely qualifies as an opinion. It's a simple fact.

Actually an incorrect opinion. A vast majority of criminals as in the EU study you can find online use fiât money because it's untraceable while Bitcoin is traceable and transparent publicly.

Bitcoin is not the only cryptocurrency.

Right but the blockchain for people with something to hide will be about as conspicuous as El Chapo Dollars haha. Again you knock it out at the gateways.

>I think it would be possible to spin up a chain of brand new wallets and quickly funnel coins through them before the blacklist could keep up in a way that would be impossible with fiat transactions and traditional banks

Can't you spin up a chain of brand new offshore accounts/shell companies in a friendly jurisdiction and quickly funnel money through them before the blacklist could keep up?

This would work for some amount of time. However, foreign banks are unlikely to hold USD-type value without a correspondent banking relationship or a custodial banking relationship exposed to the US market (and hence US regulation).

The reason many, especially smaller, banks don't want to do business with criminals is they fear they'd lose their access to the US market through a termination of these relationships. This would then push the bank into insolvency.

I know this because all this happened to Tether, lol. There's been some documentation, likely as part of the NYAG lawsuit or the Paradise Papers leak -- or both. Noble initially refused to bank them for this reason, so they invested in Noble, who then took them on as customers. Their custodial bank (Wells, IIRC) told them to eat dirt, and it pushed Noble into insolvency.

Well that’s precisely why we have all these customer onboarding / AML regulations. To onboard trading clients (think hedge fund) I’ve seen compliance ask for corporate structure diagrams, lists of the major shareholders with bios, list of the board of directors, articles of incorporation, addresses, copies of the counterparty’s AML policy, etc.

It being the case that banks launder money for criminals at scale, it's kind of mystifying why you think anyone would need an additional way to do so.

That's only for big time criminals, terrorist organizations and human rights abusing corporations and their Ilk. Small timers gotta get creative

That's fair. I was mostly operating under the impression banks care primarily about problems at scale (where they are invested in being part of the problem), but perhaps that was naive.

Almost as simple as cash money. Easier because you don’t have to lug it around, harder because nobody accepts it for payment and it’s still traceable.

> If you don't trust your government you've got bigger problems than crypto. If you trust your government crypto is irrelevant.

This is far too black and white. You may trust your government not to engage in a vendetta against you for no reason and still not trust them not to pass onerous regulations that harm you unintentionally and then provide no recourse for the victims of that outcome.

Doesn't seem to be working in this case though?

We don't know that yet since everything said so far is speculation.

Oh all I meant was the proposed legislation is a form of onerous regulation that harms folks, intentionally or otherwise, that offers no recourse - that crypto can’t help you out of. That likely extends outward IMO.

That's exactly why the proposed legislation is so problematic. It harms folks and offers no recourse... other than breaking the law. Then some of the innocent victims of the harm become criminals because they prefer that to suffering the harm at no fault of their own, and you introduce all of the problems inherent in black markets.

I have yet to hear a solid argument for why it should be in all circumstances be regulated like investment securities even when only being used as currency (like cash).

Literally nobody uses it as cash. nobody

First of all you're literally wrong. I've seen people use it to buy things with.

But even accepting that the majority of existing holders are using it for speculation, why do we have to pre-ruin its ability to ever be used as a medium of exchange?

Acceptance obviously has network effects. The user doesn't have much incentive to set up crypto if nobody accepts it, and the vendor doesn't have much incentive to accept it if few of their customers have it set up. But everything starts that way. Then some large merchant or group thereof decides they want to promote its use and offers everybody a 15% discount for using it, so a third of their customers do so for the discount, and then millions of people have it set up and other vendors start accepting it now that there are a large enough population of customers. That hasn't happened yet, but what's your theory for why it never could?

> But even accepting that the majority of existing holders are using it for speculation, why do we have to pre-ruin its ability to ever be used as a medium of exchange?

The credit for that goes to the core team and the 7tx/sec limit.

Crime like downloading a movie from pirate Bay?

I wager way more people did that in its heyday than have a moral objection (rather than an, err, pragmatic one) to custodial wallets. Further, copyright infringement tends to be a low priority civil matter, while laundering billions of dollars tends to be a high priority criminal matter.

the laundering of billions of dollars is usually done in, dollars which are totally anonymous rather than a transparent blockchain that transmits all your transactions to the feds.

Only because bitcoin isn't used by anyone. I'm not willing to wait for that to switch.

TIL that “ancap” is some sort of slang for, apparently, “anarcho-capitalists”, here.

It’s slang for anarcho-capitalist/ism everywhere.

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