FRIENDS AND ENEMIES
Interesting stuff this past week – governments coming for custody, for mixers, for nodes (potentially) among other things, all while massaging the definition of money to meet the needs of the security state (one of which is always no one gets an inch).
Anyway, catch the draft last week? My Commanders took Daniels, he’s going to be electric!
(I’m kidding, lets hop in.)
DTCC Says No to Crypto Collateral
This story made it into the briefing, but I’m not sure what to make of it. While its true that crypto/Bitcoin products can be used as collateral for fiat loans by basically anyone via networks like Atomic or others, to be frank its not entirely clear how many Bitcoiners are using their coins as collateral via traditional, public market mechanisms. For example, you can roll into a major bank with $100k in ETF holdings, transfer them to the bank, and have the bank issue you a loan at 50% LTV in order to, say, purchase a house. I’m not 100% sure this is what the DTCC is trying to avoid, though.
Instead, I think that most big brain players are starting to see a Bitcoin price rise as basically inevitable, and with it a number of new HNW (high net worth) participants suddenly able to execute speculative currency attacks at a scale not typically seen in the retail ranks. The mechanism works something like this – broadly, you are borrowing fiat (depreciating) to buy Bitcoin (appreciating) until the fiat destruction is complete.
This isn’t the only reason, though, that I think the DTCC took this action (implementation date April 30), especially since there still seems to be a bit of fog around exactly what is impacted, and how much, so let’s keep moving.
(Sidenote – Now playing: NoahJ DJ Set Live @ COACHELLA (youtube.com))
Samourai Nabbed and Turfed by US Feds
Consider this story alongside our first story. The Justice Department decided that it had finally had enough of the rootin’, tootin’ Twitter hootin’ Samourai mixing service on Wednesday. To the best of my knowledge two devs were apprehended, servers seized, domain bannered, and the entire operation basically dummied over about a day.
Coin mixing is a tricky business, but at the core of the justice department charge is the following – these people and this tool are aiding and abetting money laundering for criminals. Wew lad. We discussed this at length on CBP some time ago, in a clip that’s since been taken down, but the long and short is this: if you take a fee, you are an attack vector. There’s not really any debating, no soft whimper of “code is law” etc when money laundering is adjacent to your product and you’re collecting revenues from it’s use. Does it suck? Yes. Is the DOJ right? I think the answer is closer to yes than no. Bitcoin’s transparency means that there will inevitably be further evidence released that points to exactly who laundered, when and how much money laundering was done, and maybe more importantly whether anything was directly anti-US (think foreign policy interests, terrorism, etc).
That said, this is part of a clear trend, outlined in this tweet from yours truly that enjoyed a bit of virality. Look, there is clearly something afoot: capital gains taxes proposals are popping up everywhere, exit taxes restrict movement, and tax outfits like the CRA and IRS are on hiring sprees – did you know the CRA added 5000 new employees last year? They aren’t going after Galen in their first year on the job, they’re going after you. It’s never been more important for Bitcoiners to consider privacy a first priority when using BTC. It’s also time to consider becoming nomadic in terms of your earning power – picking up skills that will allow you to flee a jurisdiction with minimal friction (outside of unavoidable issues like large asset sales, family, your wife not wanting to move further from her pottery class, etc.) in the event that you’ve seen enough and don’t want to be in place when the clamps truly come down.
That’s really all there is to consider this week IMO. Don’t forget, Scribe and SB are co-hosting the show alongside me this week as Len takes a week of vacation/protest over the Bitcoin Magazine episode on Tuesday night.
Have a great rest of the weekend pals!