March 30, 2022: Rug-ulation 🧑⚖️🏛️
How governments conscript centralized entities into their war against crypto.
Record Breaking Hacks? Tough cookies, but just another day at the home office. 🥱
Idiotic Regulation? OK, now you’ve got my blood boiling. 😡😡😡
Once upon a time it felt like wise governments and cryptocurrencies could not merely co-exist, but thrive. Perhaps that may still be true. Yet I’m not sure we’ll find out. Too many governments are demonstrating they are unworthy, incompatible, and lack any credibility to lead on the subject.
For all the fighting we have to do to get governments to take one step forward, they go and take several steps backwards. At the same time crypto builders are DDOS-ing regulation by building so fast, regulators are fighting back by DDOS-ing cryptocurrency advocates with a million attempts at regulation. Here’s a snapshot of the latest madness from around the globe:
The EU
The European Union looked like they may have wisely defeated their unwise proof of work ban. Yet what is dead may never die. Their goofy legislative process is threatening to revive this stunningly stupidly attack via amendment.
It’s nice the CEX’s are able to lead the charge against this, but they have their limitations too as we’ll discuss later.
Canada
Canada is outing themselves as steadfast opponents of their citizen’s rights to self-custody their own funds. Last month they attacked cryptocurrency CEOs simply for citing the existence of the public/private key cryptography that underlies cryptocurrency.
Since then, Coinbase appears to have been on the business end of the regulators’ sticks.
USA
I’m unwilling to proffer opinion on other country’s regulations. I’m happy to describe their efforts neutrally. I’d argue calling their moves “stunningly stupid” is merely an objective statement of fact. If Canada and Europe want to throw autocastration parties, they can knock themselves out for all I care.
Yet when my own country acts to threaten our self-interest, it undermines our national security. I’m obliged to condemn this.
We let our guards down earlier this month when the Biden executive order ostensibly payed lip service to the benefits of cryptocurrency. As I warned at the time though, it frontloaded the enforcement liabilities and backloaded the benefits.
Remember the agencies enforcing this have Orwellian powers and essentially carte blanche to run amok.
Don’t pay attention to the government’s honeyed words, keep an eye on their actions. They’re claiming cease-fire, but still pressing the attack!
It was only in 1913 the US successfully re-imposed an income tax. It’s just 1% for most people or 8% for the rich! How’d that play out?
For this reason I have little sympathy for discussion of an “unrealized capital gains tax” only on the ultra-wealthy. Not because I have sympathy for the ultra-wealthy, but because I’m old enough to know where exactly where that’s going to end up.
Similarly, we know Gensloooor is never going to stop his quixotic crusade to grant his agency universal power over cryptocurrency. I once thought his organization could be reformed by sharper thinkers like Hester Peirce, but at this point I’m more sympathetic to arguments to simply disband the agency permanently.
In a few months when I see fellow apes whining about Americans getting “protected” from yet another airdrop. I’m going to ask if they participated in the still-ongoing LeXPunKArmy x PAC DAO’s action campaign. Show me the NFT POAP you got for your ten minutes of work and we’ll commiserate.
Oh, you didn’t write a letter? You’ll get exactly zero sympathy.
I’ll offer some leniency if you have the NFT receipts but lack the capability to display it due to OpenSea shenanigans. Indeed, the most ominous looming threat is less direct government action, but indirect coercion against centralized entities. More than ever, governments are enlisting centralized agencies to fight their battles.
Centralized Pressure Points
As long as governments attack cryptocurrency, no centralized service is trustworthy.
OpenSea
Shame on OpenSea! They can’t find time to respond to basic support requests (any update on ticket #283048 opened months ago?), yet they can find time to censor popular collections?
Not following NFTs too closely, it’s confusing how OpenSea happened to become the leader in the space. It’s abundantly clear we deserve something better.
Coinbase
Above I cited examples of Coinbase complying with Canadian laws. I still feel some sympathy for Coinbase because they’ve inserted themselves into a difficult but important position, and to date have been positive standard-bearers.
Yet they also understand the limitations of their role mean they’re the first to feel the blunt force of pressure from short-sighted governments.
Get your money off CEXes. Follow @BowTiedIguana on Twitter and keep your money safely in your possession.
Greenpeace
OK, Greenpeace isn’t exactly a “centralized entity” in the vein of Goldman Sachs, but it’s too funny to pass up, and happens to be directionally consistent. The non-profit stepped in the direction they perceived could achieve them political capital, and instead lit their credibility on fire.
LimeWire
LimeWire’s not done anything bad just yet, but this made me laugh so hard I had to drop this…
Decentralized Entities
People don’t care about decentralization until it’s too late. Tick tock, we’re basically there…
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