The cryptocurrency community is on a collision course with government regulators and the centralized banking system, and the outcome could have major implications for a digital currency model based on decentralized finance and peer-to-peer transactions around the world.
The impending collision kept Bitcoin Amsterdam participants very busy this week, billed Described by the organizer Bitcoin Magazine as the “biggest Bitcoin conference in Europe”. The Dutch setting offered a bit of irony. The Bank of Amsterdam was founded in 1609 as the world’s first true central bank, and the Sibos Central Bank Conference was held at a different location in the city at the same time.
“Are they talking about which nation state they want to wipe out of the financial system?” BTC Inc. chief executive David Bailey asked for comments in the opening session. “I can promise you we won’t talk about it here. As we say at Bitcoin, fix the money and fix the world.”
Central banks are pursuing digital options
The problem Bailey and the rest of the Bitcoin community face is that the very powers appointed to manage the centralized banking model are trying to both compete with and rein in the largely unregulated cryptocurrency space. The current battlefield includes two four-letter acronyms: CBDC and FATF.
CBDC, or central bank digital currency, is a digital form of a country’s fiat money. According to the International Monetary Fund, China and India, the world’s most populous countries, are the most advanced in adopting CBDC. European financial leaders recently confirmed plans for a digital euro in 2023, and a key White House policy adviser said the US was “extensively exploring” options for issuing a dollar-based CBDC.
“Bitcoin is serious around the world and central banks are wrestling with it,” said Frank Holmes, executive chairman of Hive Blockchain Technologies, during a panel session at the event. “They will copy. It’s only a matter of time.”
As major countries move to digitize existing fiat money, the cryptocurrency community has expressed concern about the impact of such a move. In September, the Bitcoin Policy Institute published a report citing China’s use of CBDC as a cautionary tale for the US to consider in its own plans.
Chinese authorities have indicated that CBDC should not be as anonymous as cash, raising privacy concerns among advocates of other digital currencies that the move to CBDCs will result in the government pursuing personal spending habits. Federal Reserve Chairman Jerome Powell said that if the US were to issue a CBDC, it would not be anonymous either.
“CBDCs stand for control”, Allen Farrington, an independent journalist covering Bitcoin, said during a panel session at the conference. “I prefer to stand for freedom.”
Growing privacy concerns
The fight to keep the digital currency anonymous and free from government control has spread to the regulatory arena within the European Union. Concerns about global money laundering prompted the G-7 countries to create the Financial Action Task Force or FATF as early as 1989. The group has since grown into a significant concern in the cryptocurrency world in terms of digital currency regulation.
Earlier this week, the European Parliament advanced a plan to regulate digital currencies under the same rules as traditional finance, by making all digital transactions traceable under the FATF charter. The move raised additional privacy concerns for future digital transactions across much of Europe and exposed vulnerabilities within the crypto community as it deals with the regulatory threat.
“As far as I’m concerned, this FATF panel can go [blank] yourself,” said Matt Odell, co-founder and editor-in-chief of CoinPrices.io. “I have no faith in financial regulators that take back supervision.”
Kevin Murcko is the founder and CEO of crypto exchange Coinmetro and advises regulators and government agencies on applying governance to emerging financial markets. Murcko’s position, as laid out in a recent blog post on his company’s website, is that decentralized finance should be regulated to control fraud and make DeFi more accessible to a wider audience.
However, this week Murcko expressed concern that the dual freight trains of CBDC and FATF could potentially overwhelm a burgeoning industry unless the crypto community can come up with a stronger argument in their defense.
“We have all the tools we need to get rid of the cumbersome regulation, but they don’t understand the technology,” Murcko said. “We have to control the narrative. We have a terrible narrative right now.”
WikiLeaks and Bitcoin
However, this narrative, based on technological change and challenges for established institutions, has also found resonance in other areas of societal change. One of the keynote speakers at Bitcoin Amsterdam was Stella AssangeWife of Julian Assange, founder of WikiLeaks, publisher of classified information from anonymous sources.
When WikiLeaks released nearly half a million classified documents related to US wars in Iraq and Afghanistan in 2010, the PayPal account used by the nonprofit for donations was shut down. A year later, payments companies, representing over 97% of the global market, had shut down WikiLeaks funding taps. That forced the site to reach out to the bitcoin community, and over a 10-year period, WikiLeaks received $37 million in bitcoin donations.
“The PayPal shutdown just cut WikiLeaks out of 99% of revenue and made WikiLeaks one of the early adopters of Bitcoin,” Assange said. “Bitcoin and its technology are trying to fight censorship in the same way Julian did. There you have a lesson to learn about anyone who challenges the hegemonic order.”
Photo: Mark Albertson/SiliconANGLE
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