Cryptocurrencies in the hands of rogue countries—risks for cryptocurrencies?

[Darker45]

~snip~

Meanwhile, the socialist republic of brazil has launched three bizarre, poorly drafted resolutions that will practically kill national exchanges, as they will no longer be viable to use.

One example of the absurd regulations they want to impose on their citizens is reporting all withdrawals from self-custody wallets, requiring the user to identify the destination address (similar to AOPP).

With this, the brazilian government wants to keep all data centralized in its hands: name, identity, transactions, and other data. All it takes is for this data to leak and end up in the hands of criminals.

The pretext is the same as always: to combat money laundering and terrorism, but the real intention is to have absolute control and collect increasingly more taxes.

But how will they ensure compliance with these rules? Given that the user can report true data and then easily clear the KYC using privacy services?

The funny thing is that there's no way they can guarantee the law will be enforced, because naturally people will opt for more privacy; after all, that's what we use Bitcoin for.

That's why I believe it's impossible to completely avoid friction. There will always be conflict, that is, despite compromises. In the first place, government and control are anathema to the Bitcoin philosophy. Unfortunately, you also can't expect the government to just let Bitcoin be.

What Brazil is doing isn't novel. It's also being required in my country. The recipient's name is also asked whenever you're withdrawing funds from a centralized application to an external address. In a way, self-custody has lost its meaning because your wallet address is already labeled with an identity and even a location in some cases.

I'm not expect the cat-and-mouse game to cease anytime soon.

[traderethereum]

Inconveniences can happen besides conveniences. All things come with the reverse. We feel comfortable using crypto but behind that, we also face discomfort which is strict regulations from our government. They don't want to see their citizens use crypto for illegal matters so they apply stricter policies. We can't do anything and just follow the regulations but we must avoid using crypto for illegal things.

If we can use crypto with the right and benefit from that, our government will not be a problem. When they check on us, they will not find anything suspicious because we can use crypto with the right.

[justdimin]

Inconveniences can happen besides conveniences. All things come with the reverse. We feel comfortable using crypto but behind that, we also face discomfort which is strict regulations from our government. They don't want to see their citizens use crypto for illegal matters so they apply stricter policies. We can't do anything and just follow the regulations but we must avoid using crypto for illegal things.

If we can use crypto with the right and benefit from that, our government will not be a problem. When they check on us, they will not find anything suspicious because we can use crypto with the right.

Regulations, those are called regulations. They are not making bitcoin any less decentralized, they are not making it controlled, they are controlling YOU, not the bitcoin and that's why it's called regulations because they regulate you.

It means of course you are not going to steal someone's crypto and get away with it, if can be proven on court, you will be jailed, or you can't just sell rugs and get crypto and hope that will be ok, if proven, once again jail. Which means, government has a need to protect its citizens from the criminals and that means it will include crypto as well, I know crypto folk wants to be free from the government outreach as much as possible but you have to realize there is a level to this.

[DrBeer]

I think countries will keep a close eye on transactions to try to collect taxes from citizens and have greater control over money, because money is a way of enslaving people. But deep down, I think those who hold Bitcoin do not care much about that, transactions will continue to happen whether the state likes it or not.

Of course. That's expected, especially now that crypto is already starting to become a mainstream technology. The price to pay for adoption is regulation. Regulation is associated with control. Although Bitcoin itself can't be controlled by the government, it's use, conversion, access, and whatnot could easily be made inconvenient by the government.

This is the reason why sometimes it's confusing which should be preferred: adoption, getting into the mainstream, or remaining as an underground currency.

Meanwhile, the socialist republic of brazil has launched three bizarre, poorly drafted resolutions that will practically kill national exchanges, as they will no longer be viable to use.

One example of the absurd regulations they want to impose on their citizens is reporting all withdrawals from self-custody wallets, requiring the user to identify the destination address (similar to AOPP).

With this, the brazilian government wants to keep all data centralized in its hands: name, identity, transactions, and other data. All it takes is for this data to leak and end up in the hands of criminals.

The pretext is the same as always: to combat money laundering and terrorism, but the real intention is to have absolute control and collect increasingly more taxes.

But how will they ensure compliance with these rules? Given that the user can report true data and then easily clear the KYC using privacy services?

The funny thing is that there's no way they can guarantee the law will be enforced, because naturally people will opt for more privacy; after all, that's what we use Bitcoin for.

I will not condemn Brazilian laws; I have not studied their decisions in depth, but I know one thing. The paradox of our lives is that in trying to make our world better and safer, we have to take a lot of steps that look very bad and create a lot of inconvenience, including restrictions on freedoms. At the same time, criminals continue to “improve their skills,” innocent citizens continue to suffer, and governments continue to “tighten the screws” for the greater good, but in reality, the situation only gets worse. I see the reason for this in the fact that criminals never play by the rules or laws, while innocent citizens are often very law-abiding.

[Forsyth Jones]

-

Let's be honest, most people who use Bitcoin are peaceful people. Those who laundered billions in corruption schemes didn't use Bitcoin; they used banks, offshore accounts, and dollars. The big problem with the status quo and this especially includes brazil, is that they want to centralize all information in their data centers. Why? They're proud of it, but they don't think about the associated consequences, such as data leaks (which happen from time to time), and this privileged information falling into the hands of criminals and fraudsters. Who will be held responsible for that? Certainly not the state.

One of the absurdities of the brazilian state is forcing exchange users to report each address, including identity, purpose, etc. All stored in state-owned data centers with the sole purpose of controlling, monitoring and collecting more taxes under the pretext of "protecting" investors.

I will not condemn Brazilian laws; I have not studied their decisions in depth, but I know one thing. The paradox of our lives is that in trying to make our world better and safer, we have to take a lot of steps that look very bad and create a lot of inconvenience, including restrictions on freedoms. At the same time, criminals continue to “improve their skills,” innocent citizens continue to suffer, and governments continue to “tighten the screws” for the greater good, but in reality, the situation only gets worse. I see the reason for this in the fact that criminals never play by the rules or laws, while innocent citizens are often very law-abiding.

One thing is certain: as long as those who make the law are a bunch of stupid idiots who don't understand the importance of freedom and privacy and can't differentiate between that and a common crime, unfortunately we will never reach a middle ground of security and privacy. We will always have an extreme where the weakest will be the ones harmed. The result is complete chaos, a minefield full of risks for ordinary or low-income investors who just want to secure their assets.

[DrBeer]

....
One thing is certain: as long as those who make the law are a bunch of stupid idiots who don't understand the importance of freedom and privacy and can't differentiate between that and a common crime, unfortunately we will never reach a middle ground of security and privacy. We will always have an extreme where the weakest will be the ones harmed. The result is complete chaos, a minefield full of risks for ordinary or low-income investors who just want to secure their assets.

The situation here is slightly different. It is not about restricting freedoms; in this situation, the restriction of freedoms is a consequence of human habits. One of these “habits” is “using useful and good things for bad deeds.” The entire history of humanity is permeated with such examples. We invented a method of producing fire to heat our homes, but we use fire to destroy other tribes. We invented strong and reliable iron, but we use it to make weapons to kill our fellow human beings. We invented space flight, but we use rockets to bomb peaceful cities...
The same is true of cryptocurrencies: invented for freedom, independence, convenience, and security, they began to be used to finance wars, terrorism, drug sales, and other dirty deeds...

[DrBeer]

Inconveniences can happen besides conveniences. All things come with the reverse. We feel comfortable using crypto but behind that, we also face discomfort which is strict regulations from our government. They don't want to see their citizens use crypto for illegal matters so they apply stricter policies. We can't do anything and just follow the regulations but we must avoid using crypto for illegal things.

If we can use crypto with the right and benefit from that, our government will not be a problem. When they check on us, they will not find anything suspicious because we can use crypto with the right.

States have several “fundamental reasons” to be wary of cryptocurrencies. I would divide them into two categories:
1. Internal classic problems
2. Illegal
I will start with point 2 — these are well-known activities where cryptocurrency is used to sell illegal goods/services, launder/withdraw criminal funds, finance illegal structures/organizations, etc. Everything is clear here, and in this part, one can agree with the state.

But point 1 is closer to us, ordinary citizens, who can hardly be considered criminals/terrorists. 
These are problems related to the concealment of income and tax evasion, risks to the state's financial system, and uncontrolled transfers of funds between citizens. The problem for the state is that it tries to tax every action that can be considered income. The state is supported by taxes and... control over the movement of money. It has always been this way, and it seems that this is how they are trying to preserve the system Therefore, the state will try in every way to limit the use of cryptocurrency or make it more “taxable.”