The PATRIOT Act comes to cryptocurrency

[o_e_l_e_o]

If congress agrees then there might have more laws against self custody, there will be stricter KYC and there will certainly be a certain classification of people who will be banned from using the cryptospace.

As I've said before, this is the clear direction the US government is heading in. They want the only bitcoin to be bitcoin which is bought on fully KYCed exchanges, stored on fully KYCed exchanges, and not sent anywhere except to other fully KYCed exchanges. They want complete control over everything that you "own", and they want complete surveillance of everything that you do. As with this piece of legislation, using any non-KYCed service will be illegal. Hell, even holding your own coins will be illegal.

I understand this has already started in other countries. For example this news story from a few days ago: https://www.nobsbitcoin.com/gemini-uk-to-prohibit-regular-bitcoin-transactions/

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[apogio]

I understand this has already started in other countries. For example this news story from a few days ago: https://www.nobsbitcoin.com/gemini-uk-to-prohibit-regular-bitcoin-transactions/

What makes an exchange approved or non-approved? Who approves an exchange?

[BenCodie]

This is good news in a sense...Why? Because this is pretty much admission that they are giving up on the on chain analysis scam that has been pedalled for years! If it actually worked in all scenarios, why on earth would they come out with this crap?

I am sure that they will not succeed, just like they haven't succeeded to erode privacy to date.

Now, this is even more validation that we need a board for cyber security and privacy here. If we don't add it, ignorant people who don't respect thus rule when it is implemented will be unfairly punished, and this is the downside. If we all have good practice, I say good luck to them! If we are weak and allow them to succeed, it will be detrimental for many.

If you agree with a board in bitcointalk for cybersecurity and privacy:
Discuss here | Vote here

I understand this has already started in other countries. For example this news story from a few days ago: https://www.nobsbitcoin.com/gemini-uk-to-prohibit-regular-bitcoin-transactions/

What makes an exchange approved or non-approved? Who approves an exchange?

Whoever bows down to permitting full surveillance to government and pays the fee to get the approved badge...like any other form of government approval.

[apogio]

Whoever bows down to permitting full surveillance to government and pays the fee to get the approved badge...like any other form of government approval.

Which government though?

I mean an exchange is an exchange. It's a business that exchanges from one currency to another. In our case, a crypto exchange buys FIAT and sells crypto and vice-versa.

That said, how can Gemini know which other exchanges are "permitted" by the government and more importantly, why do they need to obey to this rule? I mean why would they need to allow incoming funds only from certain other exchanges? That's stupid. It would also decrease their incoming liquidity.

[BenCodie]

Whoever bows down to permitting full surveillance to government and pays the fee to get the approved badge...like any other form of government approval.

Which government though?

I mean an exchange is an exchange. It's a business that exchanges from one currency to another. In our case, a crypto exchange buys FIAT and sells crypto and vice-versa.

That said, how can Gemini know which other exchanges are "permitted" by the government and more importantly, why do they need to obey to this rule? I mean why would they need to allow incoming funds only from certain other exchanges? That's stupid. It would also decrease their incoming liquidity.

I assume US. We even saw that Kraken, a non US exchange, was demanded to provide user data to the IRS for auditing and after a court battle, Kraken lost. So, the US has power even outside of the US.

In relation to this topic we are talking about US exchanges in any case, so to answer your question shortly: the US government.

They would need to obey the rule because otherwise, no business, or fines, or court battles. It probably won't be prominent today or tomorrow, but once this is all enforced it will change the landscape. However, they can't control dexes, they can't control code. There will be routes to avoid these rules for for those who don't like them, that goes for both companies and individuals.

[apogio]

They would need to obey the rule because otherwise, no business, or fines, or court battles. It probably won't be prominent today or tomorrow, but once this is all enforced it will change the landscape. However, they can't control dexes, they can't control code. There will be routes to avoid these rules for for those who don't like them, that goes for both companies and individuals.

This is rediculous. So we know for a fact that they try to control exchanges because they know they can't control bitcoin fundamentally. Which means they know they can't shut it down and they try to control it using otherr techniques. Sounds like they are desperate. P2P exchanges for the win.

[nutildah]

We even saw that Kraken, a non US exchange, was demanded to provide user data to the IRS for auditing and after a court battle, Kraken lost.

Kraken is a US exchange, and its founder, Jesse Powell, is an American. It is notable for being not only one of the first and longest-standing US-based BTC exchanges, but for also holding out on over-reaching demands from the government, to the farthest extent possible. An example of this would be continuing to list XMR when most other US exchanges have delisted it out of fear of future regulation & compliance issues.

So, the US has power even outside of the US.

This part is still true.

[GigaBit]

United States want to maintain their authoritative behavior in every place in the world and that is why they are so eager to enact such laws. When they are unable to take control, they try to impose by enacting various laws. The SEC is working as a major tool for them. Trying to take control crypto currency but only in BTC they could not control. They will certainly fail to control it if we move away from those centralized platforms. No matter how hard they try, they can't control it. Bitcoin would completely collapse if it was controlled by such an entity.


https://bitcoiner.guide/nokyconly/

The main enemy in the cryptocurrency world is “KYC” and this KYC completely diverts the religion of cryptocurrency. Only one major feature of cryptocurrency is that it would work against the conventional financial system. It would have no centralization. It is completely independent, anonymous and supports transparency. But if users are made KYC then that freedom, transparency, anonymity everything will be disappear.

US Senators Elizabeth Warren and Roger Marshall were the first to propose such legislation that would require every cryptocurrency-related corporation or those associated with such services to perform KYC as a bank. ‍So i think The purpose for which cryptocurrency was born that will go in vain. It can be said that KYC is like killing cryptocurrency by strangulation.

[Abiky]

As I've said before, this is the clear direction the US government is heading in. They want the only bitcoin to be bitcoin which is bought on fully KYCed exchanges, stored on fully KYCed exchanges, and not sent anywhere except to other fully KYCed exchanges. They want complete control over everything that you "own", and they want complete surveillance of everything that you do. As with this piece of legislation, using any non-KYCed service will be illegal. Hell, even holding your own coins will be illegal.

I understand this has already started in other countries. For example this news story from a few days ago: https://www.nobsbitcoin.com/gemini-uk-to-prohibit-regular-bitcoin-transactions/

The question is: How will the government be able to enforce KYC in decentralized protocols/services and non-custodial wallets? For what I know, it's impossible to do such a thing. There's nothing stopping a person from acquiring BTC (or any other crypto) without KYC and storing it in a non-custodial wallet. Even if it's "illegal". People from China have already been doing this, even when the country outright rejected crypto/Blockchain tech. In fact, crypto has become more popular in the region.

Tighter crypto regulations will only make decentralization stronger in the long run. It's already too late to put a stop to the revolution. If you thought censoring mixers was enough, then you haven't seen nothing yet. I believe governments (particularly the US government) will target privacy coins like Monero and Zcash next. They will make an excuse that such coins are being used massively for money laundering and tax evasion. This will be a never-ending war between crypto and mainstream governments. As long ss people stand up and fight, don't expect the revolution to go anywhere soon.

[apogio]

The question is: How will the government be able to enforce KYC in decentralized protocols/services and non-custodial wallets? For what I know, it's impossible to do such a thing. There's nothing stopping a person from acquiring BTC (or any other crypto) without KYC and storing it in a non-custodial wallet. Even if it's "illegal".

Yes. What they want to achieve is to force you to use exchanges for trading, so they are able to know how much you hold.

If you buy 0.1BTC from a KYC exchange, then they don't care where you withdraw it to. They will claim that you own 0.1BTC.

They also want you to use exchanges when you sell, so they can prove that you own X amount of FIAT, gained by selling BTC and tax you on that.

[oktana]

The link between a transaction/wallet and the real-world identity of a person is meant to be anonymous and known by no one (in fact, there should be no link), but sadly, Centralized platforms (exchanges, etc) don't care about that. I have always distaste platforms that ask for KYC as I see no reason why it is valid for a system that was built to respect privacy. What I find scary is that these centralized platforms have a record of every transaction you make, and then, they have a record of your identity (through KYC) and have tied this together. While they know it's you who is making the transaction (which is bad), the chances of that data getting leaked are still there (which is terrible)!

[Fiatless]

The question is: How will the government be able to enforce KYC in decentralized protocols/services and non-custodial wallets? For what I know, it's impossible to do such a thing. There's nothing stopping a person from acquiring BTC (or any other crypto) without KYC and storing it in a non-custodial wallet. Even if it's "illegal". People from China have already been doing this, even when the country outright rejected crypto/Blockchain tech. In fact, crypto has become more popular in the region.

It is true that the government and its agencies cannot stop decentralised platforms and people will still secretly buy Bitcoin. But we should also take into cognisant that unfavourable policies discourage people from joining or continuing in the Bitcoin ecosystem. People will always avoid investments that are illegal in a country because it will be seen as risky. More Chinese citizens would have acquired more Bitcoin if it was legal in China and Beijing crypto space would developed to compete favourably with the US market.      

Tighter crypto regulations will only make decentralization stronger in the long run. It's already too late to put a stop to the revolution. If you thought censoring mixers was enough, then you haven't seen nothing yet. I believe governments (particularly the US government) will target privacy coins like Monero and Zcash next. They will make an excuse that such coins are being used massively for money laundering and tax evasion. This will be a never-ending war between crypto and mainstream governments. As long ss people stand up and fight, don't expect the revolution to go anywhere soon.

After the regulation of mixers is completed in the US, I suspect that they will move after decentralised exchanges. Laws will be enacted to criminalise its operations using the same outdated excuse of fighting against terrorist financing. They just want to control the financial sector of their country because they think it will make governance easy for them. The best advice still remains "Not your keys, not your coins".    

[BenCodie]

They would need to obey the rule because otherwise, no business, or fines, or court battles. It probably won't be prominent today or tomorrow, but once this is all enforced it will change the landscape. However, they can't control dexes, they can't control code. There will be routes to avoid these rules for for those who don't like them, that goes for both companies and individuals.

This is rediculous. So we know for a fact that they try to control exchanges because they know they can't control bitcoin fundamentally. Which means they know they can't shut it down and they try to control it using otherr techniques. Sounds like they are desperate. P2P exchanges for the win.

They are desperate. They're losing control over money, over the world, and after all, they've essentially been scammed by a system that can never be accurate enough to act one....imagine how much they spent funding or purchasing services from companies like chainanalysis, or on forensics that weren't accurate. So now they've just decided, fuck it, let's go back to censorship.

It's good and bad as said in my last post - those wise enough to stay p2p can win. Those who aren't wise enough will unfortunately get caught in the web.

We even saw that Kraken, a non US exchange, was demanded to provide user data to the IRS for auditing and after a court battle, Kraken lost.

Kraken is a US exchange, and its founder, Jesse Powell, is an American. It is notable for being not only one of the first and longest-standing US-based BTC exchanges, but for also holding out on over-reaching demands from the government, to the farthest extent possible. An example of this would be continuing to list XMR when most other US exchanges have delisted it out of fear of future regulation & compliance issues.

So, the US has power even outside of the US.

This part is still true.

Hey, I do apologize and thank you for correcting me. I had foolishly read and article which made a distinct point out of Kraken not being based in the US and hence being a good example of overreach by the IRS and the US.

I tried to find the article with no luck and this point has me a little confused. Maybe, it has made a point of being able to get the records of even non-US based users. I should have bookmarked the article.

[o_e_l_e_o]

Because this is pretty much admission that they are giving up on the on chain analysis scam that has been pedalled for years!

I very much doubt it. They will continue to use chain analysis for transactions which don't involve centralized exchanges. They aren't going to abandon their mass surveillance just because they're achieved complete surveillance of a subset of transactions.

If it actually worked in all scenarios, why on earth would they come out with this crap?

Because they don't have to pay for this. It's inefficient to continually pay for a block analysis company when you can just make it law for exchanges to hand you the data directly.

I am sure that they will not succeed, just like they haven't succeeded to erode privacy to date.

We have less privacy today than ever before in history, and with each passing year it gets worse and worse. Everything spies on you these days - your computer, your phone, your TV, even your car.

The question is: How will the government be able to enforce KYC in decentralized protocols/services and non-custodial wallets?

Yes, they can't enforce it, but they can make it illegal which as Fiatless points out will be enough to discourage the vast majority of people from buying and owning bitcoin. And it doesn't just stifle adoption for individuals, but will also stifle adoption for business and services who don't want to jump through endless hoops and start having to collect KYC information from their customers, so will just opt not to accept bitcoin at all.

[Abiky]

The link between a transaction/wallet and the real-world identity of a person is meant to be anonymous and known by no one (in fact, there should be no link), but sadly, Centralized platforms (exchanges, etc) don't care about that. I have always distaste platforms that ask for KYC as I see no reason why it is valid for a system that was built to respect privacy. What I find scary is that these centralized platforms have a record of every transaction you make, and then, they have a record of your identity (through KYC) and have tied this together. While they know it's you who is making the transaction (which is bad), the chances of that data getting leaked are still there (which is terrible)!

KYC brings back the "single points of failure" tied to the existing banking system. You can see why Bitcoin was created without the need for a middleman. We should be all using decentralized exchanges for crypto to reach its full potential. Unfortunately, greed/convenience goes above all else. The vast majority of the people don't care about decentralization. They just want what's most convenient for them. Even if that means sacrificing their personal information.

It's this reason why centralized exchanges are the dominant forces of the market. They're the perfect tool for governments to have a full scope of your crypto-related activities. It's surveillance at its fullest. With this, governments have some sort of control over crypto. That includes Bitcoin even if its core Blockchain network is decentralized. There's nothing we can do about it if we want prices to go all the way to the moon. Who knows what the future holds for BTC?

[apogio]

KYC is the only weapon that the current financial system has, in order to control Bitcoin. There is absolutely no other way to control it.

[oktana]

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It's this reason why centralized exchanges are the dominant forces of the market. They're the perfect tool for governments to have a full scope of your crypto-related activities. It's surveillance at its fullest. With this, governments have some sort of control over crypto. That includes Bitcoin even if its core Blockchain network is decentralized.
…

What’s worse is that this private personal data can be hacked and there’s no greater fear than when such information get info the hands of the wrong ones. Identity theft and financial fraud (the one that most-likely happens) are no joke.

[Abiky]

KYC is the only weapon that the current financial system has, in order to control Bitcoin. There is absolutely no other way to control it.

Governments can also control Bitcoin by controlling the supply or the miners. For what I know, Bitcoin's network hashrate is controlled by a few mining pools owned by mainstream mining companies. Getting ahold of such companies will give governments full control over the network's consensus. Institutional investment companies can also buy and accumulate a large portion of BTC's circulating supply, allowing governments to dominate the network if they want to. After all, these companies are subject to government's rules.

So BTC can easily lose its decentralization "in a blink of an eye". That would be a huge win for banks and governments alike. With the introduction of spot ETFs, centralized exchanges dominating the industry, and mining pools becoming more centralized than ever, I feel that Bitcoin has already moved away from Satoshi's original vision. The whole idea was the remove/eliminate the middleman, wasn't it? 

[cryptosize]

KYC is the only weapon that the current financial system has, in order to control Bitcoin. There is absolutely no other way to control it.

Governments can also control Bitcoin by controlling the supply or the miners. For what I know, Bitcoin's network hashrate is controlled by a few mining pools owned by mainstream mining companies. Getting ahold of such companies will give governments full control over the network's consensus. Institutional investment companies can also buy and accumulate a large portion of BTC's circulating supply, allowing governments to dominate the network if they want to. After all, these companies are subject to government's rules.

So BTC can easily lose its decentralization "in a blink of an eye". That would be a huge win for banks and governments alike. With the introduction of spot ETFs, centralized exchanges dominating the industry, and mining pools becoming more centralized than ever, I feel that Bitcoin has already moved away from Satoshi's original vision. The whole idea was the remove/eliminate the middleman, wasn't it? 

That would nullify BTC if they start censoring transactions... but people can always buy ASICs and form new pools.

[o_e_l_e_o]

For what I know, Bitcoin's network hashrate is controlled by a few mining pools owned by mainstream mining companies. Getting ahold of such companies will give governments full control over the network's consensus.

Miners don't set consensus: https://en.bitcoin.it/wiki/Bitcoin_is_not_ruled_by_miners

Further, mining pools are not a single entity. F2Pool, for example, does not own or operate all its hash power, or even a majority of its hash power. Miners are individuals, businesses, and other entities around the world, which collaboratively point their hash power at a pool in order to simplify the mining process and smooth out their earnings. If a pool is bought over by the government and starts censoring transactions, then the miners who are mining with that pool are free to switch to another pool, and indeed are incentivized to do so since by staying with their censoring pool they will be earning less since they will be deliberately excluding some high fee paying transactions.