I believe this is part of a disingenuous attempt to link crypto currencies with crime.
Crypto currencies are undoubtedly used for money laundering and hiding. Dollars are undoubtedly used for money laundering and hiding. Euros and gold and car washes are all undoubtedly used for money laundering.
The question is, does the fact that an asset is used in money laundering mean it should be outlawed. I think the answer is fairly transparently no. But this is seen as the easiest rhetorical tool in the event that someone is already looking for basis to argue for banning crypto currency. Think of the children! And Terrorism!
Imagine a new country came into existence except it held no physical land, it produced no physical goods, it built no physical infrastructure, it paid no welfare, it's just an internet country. Well this country's currency is just as usable for money laundering as every other currency assuming it freely floats but because it has no structural economy behind it, money laundering makes up a disproportionate portion of it's total use. Does that mean it was invented just to launder money?
The point is: of course a new internet currency is mostly used for money laundering. That's one easy thing to do with an internet currency and the other use cases are still developing.
In the end it doesn't matter though, I believe the ability of governments to censor cryptocurrencies is drastically less than they project.
They can turn off the on ramps but they also know that could cause a rush on those assets that they could never reverse. And as the drug war taught us, throwing endless resources at preventing the sale of a commodity for currency on black markets works much better in principle than it does in reality.And in a world of floating converting convertible currencies, if they don't all coordinate a ban at once in an effective manner it's going to fail spectacularly, because there's always another currency on ramp that's just a money transfer away.
> In the end it doesn't matter though, I believe the ability of governments to censor cryptocurrencies is drastically less than they project.
The real problem is that they can interfere severely in the ability of ordinary people to use it for legitimate purposes while still not making the slightest dent in its use for criminal activity.
Because for ordinary people to use it, it would have to be accepted by e.g. Amazon, who is not going to break the law in order to accept it.
But in order to be used by criminals, it only has to be used by other criminals.
Not that I disagree, but the problem for crypto is that it its use as a currency mostly is criminal. There are very few legitimate goods and services people purchase with crypto.
Yes the US dollar is used for more crime than crypto, but it’s also used for everything else.
Crypto will continue to get a bad press unless it can be seen as “a currency sometimes used for crime” rather than “a currency only used for crime.”
I used to be surprised when I would read articles about this mythical legislative process which can and will protect lowly plebians like me. I'm not sure why so many people are under the impression legislation will be able to keep up with perversely motivated individuals or groups. Who are these legislators with motives so pure that they will never be bribed to only look out for my interests? Let's never forget there is only one person in jail for the 2008 crash this article is trying to convince us was the result of too little regulation. There was never enough incentive to protect us from the people who created that market crash.
> I'm not sure why so many people are under the impression legislation will be able to keep up with perversely motivated individuals or groups.
Because overwhelmingly it does each and every day.
[edit] This bias comes down to the same issue as folks in infrastructure roles have in the tech world demonstrating their impact. How do you demonstrate impact avoiding SEVs when, if you're successful, the SEV never happened? It's very hard to count the number of things that don't happen.
>There was never enough incentive to protect us from the people who created that market crash.
There absolutely was, it's just been a LONG time since actual progressive policy had any traction in the US, and quite frankly it's sad how many people are eager to throw away their own best interests.
Isn't part of the point of owning cryptocurrency that you want less government involvement - including government-funded protection from crime - than you would with government-run currencies?
Like, it's always pitched as a positive that a transaction is irrevocable. If I put some money in a smart contract, it behaves exactly as specified in the smart contract. If I decide to invest in some overly complicated ICO (for which I can fully read the programmatic contract before I invest), and I lose money, and then I say "I am a poor unsophisticated investor who was taken advantage of, I want my money back," doesn't that fundamentally imperil the value proposition of having a smart, programmatic contract? Now only most of the contract is on the blockchain and there's also some hidden caselaw - and "mostly deterministic" means nondeterministic.
That is - shouldn't people who believe in cryptocurrency be saying this is fine and good and working as intended, and not a problem to "fix"?
The most interesting thing I’ve seen from smart contracts is using them to structure funds management for international FOSS projects without having to create a legal entity. That saves a ton of cost and legal overhead which is otherwise very tedious.
That said, the interesting question this raises is, what happens when disagreements happen over those smart contracts? It seems like inevitably lawsuits and regulations will arrive, potentially removing the upside of using smart contracts.
This leaves me asking a couple questions. One, is the culture around “no reversable transactions!” a kind of defense mechanism against introducing legal overhead which could harm the value prop of crypto. Two, should legal overhead arrive, could the smart contracts still provide some value compared to old solutions?
A big concern is Tether. Tether is supposed to be backed by USD, but it's not. Tether does seem to be pumping Bitcoin.
The risk is that when the next recession comes along, there will be a net outflow from Tether, and just what assets are behind Tether will be revealed.
Unless you're a crook, there's no reason to keep funds in Tether. There's zero upside, and a significant downside.
These regulatory scares happen from time to time and I am betting it’s coming from highly capitalized investor classes lobbying state actors to issue threats in order to crash prices. This will lead to a low exit from dumb money and allow for capital to centralize more wealth. It’s a form of economic terrorism.
Roubini is a clown heavily mocked even by the traditional finance world and this article is from 2019.
“95% of btc volume is fake” weve known about asian exchange wash trading for the better part of the decade, its why their volume is excluded in aggregates. Theres still undeniable substantial real volume on the top 10 exchanges by users. Coinbase is not committing investor fraud as a fiduciary by reporting false numbers.
People who say this is from 2019. It doesn't matter. Apparently Bitcoin critics have limited imagination so it's the same FUD resurfacing every time Bitcoin hits a new ATH. It's either that or something about tulips, or Bitcoin's CO2 emissions etc. It's practically the same debunked myths since Bitcoin first hit $100, and then again at $1000, and then at $20k, and now at $40k...
30+ years ago banks would transfer money for anyone that wanted it. Then regulations clamped down and enforcement was lax - as a result banks were fined. Now banks including non-US banks like DB and HSBC are strict and the US government will see exactly what you're doing esp in USD.
Maybe some big exchanges like Coinbase follow the US laws closely but mostly crypto is like the old days where most people in the world can do what they want. Its in no way like these big global banks.
What's even worse for things like cryptocurrency trading is existing securities laws are basically a list of market manipulation techniques that also work for cryptocurrencies.
Except it's even worse for crypto because many tokens don't nearly have the same liquidity as traditional stocks so market manipulation is even easier with crypto.
There is also the viewpoint that bitcoin was a crime from beginning to end. That the goals of it's creation were to provide an unpreventable vector for money laundering. That it's current function of undermining the dollar order is also an intended result.
And let us not; in this age of ecological collapse, forget the emissions impact of cryptocurrencies.
Roubini has staked his reputation on Bitcoin failing, so as cryptocurrency advances, his predictions, along with his professional reputation, get dragged through the mud.
It appears he is now resorting to producing a dishonest and inflammatory appeal to the political and regulatory class, to intervene with heavy handed restrictions that would all but make any peer-to-peer use of cryptocurrency illegal, in order to make his predictions of Bitcoin's failure come true.
I hope that the top-down controlled regulatory apparatus that he supports and which impedes commerce, and exacerbates income inequality and financial exclusion, fails, and his entire political philosophy is made obsolete by cryptocurrency becoming ubiquitous.
When you piss off the wrong authorities or the wrong people, there is no place to hide. Even with cryptocurrencies. Even with Tor. Even if you hide in a remote place in the planet.
Piss off the wrong people and they will spend resources until they find you. Like the Silk Road guy, Ross Ulbricht.
There's something to that (though with more and more people having walled-garden smartphones, but no more computer, even that is debatable), but what has it got to do with the topic at hand?
The crypto world is rife with scams and thieves, but so too are the traditional financial systems. There are two key differences, however:
1. The scale of wrongdoing in the crypto world is insignificant compared to in traditional systems.
2. Some of what is deemed "criminal" in crypto systems is only criminal because it bypasses traditional controls.
In the first case, small investors and taxpayers have been on the losing end of many financial disasters which were not of their own making. But as evidenced by the multiple bailouts in the US, those negligent or intentionally malfeasant rarely suffer the consequences of their actions; on the contrary, they often profit from it.
To be sure, there are plenty of really lame scams in the crypto world - either outright frauds or ponzi schemes. And the losses to customers and clients is significant. However, if the losses in traditional system failures and thefts were calculated, we would be much better served by focusing on the traditional system problems.
In the second case, some of the criminal crypto activities (such as the transparent lotteries and ponzis operating in the Ethereum network) are arguably less risky than legal gambling or equities and futures trading. Small investors in traditional markets get cheated in invisible ways that would not be possible on a system with blockchain-published smart contracts. (That's not to imply that many people can truly grasp exactly how a given smart contract works, edge cases and all - but at least it is visible.)
I personally dislike the crypto world. In the very early days, it was a place of hope and possibility. But that was quickly buried by the waves of unethical people who were fixated on quick riches. And unfortunately, little of the potential or promises of cryptocurrencies have panned out. Meanwhile, at least in some places (Europe for example), financial transaction speed and associated costs have been reduced to well below what even crypto can offer. For example, I can move money from a Dutch account to a German account in one second, at no cost. There is no room for improvement there - ignoring the concept of anonymity of course... but that isn't really something crypto actually offers.
In the places where the banks themselves have not improved, new players have stepped in. Transferwise has saved me thousands per year for several years compared to international bank wires. Crypto can do that as well, but both endpoints then have to manage the fiat to crypto exchange.
To be fair to cryptocurrency in this regard, there has been intentional pressure from traditional financial systems to create laws that make it more difficult to exchange fiat and crypto, and that has greatly hindered some of the potential uses. Even that is evidence of how much more corrupt traditional systems are compared to cryptocurrencies.
[+] [-] anm89|5 years ago|reply
Crypto currencies are undoubtedly used for money laundering and hiding. Dollars are undoubtedly used for money laundering and hiding. Euros and gold and car washes are all undoubtedly used for money laundering.
The question is, does the fact that an asset is used in money laundering mean it should be outlawed. I think the answer is fairly transparently no. But this is seen as the easiest rhetorical tool in the event that someone is already looking for basis to argue for banning crypto currency. Think of the children! And Terrorism!
Imagine a new country came into existence except it held no physical land, it produced no physical goods, it built no physical infrastructure, it paid no welfare, it's just an internet country. Well this country's currency is just as usable for money laundering as every other currency assuming it freely floats but because it has no structural economy behind it, money laundering makes up a disproportionate portion of it's total use. Does that mean it was invented just to launder money?
The point is: of course a new internet currency is mostly used for money laundering. That's one easy thing to do with an internet currency and the other use cases are still developing.
In the end it doesn't matter though, I believe the ability of governments to censor cryptocurrencies is drastically less than they project.
They can turn off the on ramps but they also know that could cause a rush on those assets that they could never reverse. And as the drug war taught us, throwing endless resources at preventing the sale of a commodity for currency on black markets works much better in principle than it does in reality.And in a world of floating converting convertible currencies, if they don't all coordinate a ban at once in an effective manner it's going to fail spectacularly, because there's always another currency on ramp that's just a money transfer away.
[+] [-] cft|5 years ago|reply
Roubini has heard Yellen and Lagarde loud and clear and is trying to score points- perhaps aiming for a regulatory job.
[+] [-] AnthonyMouse|5 years ago|reply
The real problem is that they can interfere severely in the ability of ordinary people to use it for legitimate purposes while still not making the slightest dent in its use for criminal activity.
Because for ordinary people to use it, it would have to be accepted by e.g. Amazon, who is not going to break the law in order to accept it.
But in order to be used by criminals, it only has to be used by other criminals.
[+] [-] stretchcat|5 years ago|reply
> "Does that mean it was invented just to launder money?"
Probably.
[+] [-] topranks|5 years ago|reply
Yes the US dollar is used for more crime than crypto, but it’s also used for everything else.
Crypto will continue to get a bad press unless it can be seen as “a currency sometimes used for crime” rather than “a currency only used for crime.”
[+] [-] ffggvv|5 years ago|reply
[+] [-] genericacct|5 years ago|reply
[+] [-] toolz|5 years ago|reply
[+] [-] arcticbull|5 years ago|reply
Because overwhelmingly it does each and every day.
[edit] This bias comes down to the same issue as folks in infrastructure roles have in the tech world demonstrating their impact. How do you demonstrate impact avoiding SEVs when, if you're successful, the SEV never happened? It's very hard to count the number of things that don't happen.
[+] [-] tw04|5 years ago|reply
There absolutely was, it's just been a LONG time since actual progressive policy had any traction in the US, and quite frankly it's sad how many people are eager to throw away their own best interests.
https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...
[+] [-] harwoodleon|5 years ago|reply
[+] [-] conception|5 years ago|reply
[+] [-] geofft|5 years ago|reply
Like, it's always pitched as a positive that a transaction is irrevocable. If I put some money in a smart contract, it behaves exactly as specified in the smart contract. If I decide to invest in some overly complicated ICO (for which I can fully read the programmatic contract before I invest), and I lose money, and then I say "I am a poor unsophisticated investor who was taken advantage of, I want my money back," doesn't that fundamentally imperil the value proposition of having a smart, programmatic contract? Now only most of the contract is on the blockchain and there's also some hidden caselaw - and "mostly deterministic" means nondeterministic.
That is - shouldn't people who believe in cryptocurrency be saying this is fine and good and working as intended, and not a problem to "fix"?
[+] [-] pfraze|5 years ago|reply
That said, the interesting question this raises is, what happens when disagreements happen over those smart contracts? It seems like inevitably lawsuits and regulations will arrive, potentially removing the upside of using smart contracts.
This leaves me asking a couple questions. One, is the culture around “no reversable transactions!” a kind of defense mechanism against introducing legal overhead which could harm the value prop of crypto. Two, should legal overhead arrive, could the smart contracts still provide some value compared to old solutions?
[+] [-] Animats|5 years ago|reply
The risk is that when the next recession comes along, there will be a net outflow from Tether, and just what assets are behind Tether will be revealed.
Unless you're a crook, there's no reason to keep funds in Tether. There's zero upside, and a significant downside.
[+] [-] programmarchy|5 years ago|reply
[+] [-] trident5000|5 years ago|reply
“95% of btc volume is fake” weve known about asian exchange wash trading for the better part of the decade, its why their volume is excluded in aggregates. Theres still undeniable substantial real volume on the top 10 exchanges by users. Coinbase is not committing investor fraud as a fiduciary by reporting false numbers.
[+] [-] grapehut|5 years ago|reply
Taken with the above statement, >99.999% of all US dollar trade volume is fake. I guess USD must be a joke currency.
[+] [-] genericacct|5 years ago|reply
[+] [-] RurouniK|5 years ago|reply
[+] [-] tempsy|5 years ago|reply
[+] [-] u678u|5 years ago|reply
Maybe some big exchanges like Coinbase follow the US laws closely but mostly crypto is like the old days where most people in the world can do what they want. Its in no way like these big global banks.
[+] [-] wslh|5 years ago|reply
[+] [-] 01100011|5 years ago|reply
[+] [-] jayd16|5 years ago|reply
[+] [-] 1996|5 years ago|reply
But politicians have friends & famility working at DB and HSBC - so they'd rather show teeth and get votes by attacking the newcomers.
Who cares if there's less illegal activity there? At least they won't have to fear retaliation by cartels!
[+] [-] dehrmann|5 years ago|reply
[+] [-] heywintermute|5 years ago|reply
[+] [-] traeregan|5 years ago|reply
This is an old article though, and BitMex has been indicted for the very things mentioned in this article.
[+] [-] olefoo|5 years ago|reply
And let us not; in this age of ecological collapse, forget the emissions impact of cryptocurrencies.
[+] [-] CryptoPunk|5 years ago|reply
It appears he is now resorting to producing a dishonest and inflammatory appeal to the political and regulatory class, to intervene with heavy handed restrictions that would all but make any peer-to-peer use of cryptocurrency illegal, in order to make his predictions of Bitcoin's failure come true.
I hope that the top-down controlled regulatory apparatus that he supports and which impedes commerce, and exacerbates income inequality and financial exclusion, fails, and his entire political philosophy is made obsolete by cryptocurrency becoming ubiquitous.
[+] [-] 29athrowaway|5 years ago|reply
Piss off the wrong people and they will spend resources until they find you. Like the Silk Road guy, Ross Ulbricht.
[+] [-] hsuduebc2|5 years ago|reply
[+] [-] FDSGSG|5 years ago|reply
On the other hand the operator of Dream Market is still free, after operating his site for almost 7(!) years.
[+] [-] etaioinshrdlu|5 years ago|reply
[+] [-] Clewza313|5 years ago|reply
Regulators are slowly catching up, but as you see from Tether, still have a long way to go.
[+] [-] elevenoh|5 years ago|reply
[+] [-] FabHK|5 years ago|reply
[+] [-] xwdv|5 years ago|reply
[+] [-] Barrin92|5 years ago|reply
[+] [-] saagarjha|5 years ago|reply
[+] [-] blunte|5 years ago|reply
1. The scale of wrongdoing in the crypto world is insignificant compared to in traditional systems.
2. Some of what is deemed "criminal" in crypto systems is only criminal because it bypasses traditional controls.
In the first case, small investors and taxpayers have been on the losing end of many financial disasters which were not of their own making. But as evidenced by the multiple bailouts in the US, those negligent or intentionally malfeasant rarely suffer the consequences of their actions; on the contrary, they often profit from it.
To be sure, there are plenty of really lame scams in the crypto world - either outright frauds or ponzi schemes. And the losses to customers and clients is significant. However, if the losses in traditional system failures and thefts were calculated, we would be much better served by focusing on the traditional system problems.
In the second case, some of the criminal crypto activities (such as the transparent lotteries and ponzis operating in the Ethereum network) are arguably less risky than legal gambling or equities and futures trading. Small investors in traditional markets get cheated in invisible ways that would not be possible on a system with blockchain-published smart contracts. (That's not to imply that many people can truly grasp exactly how a given smart contract works, edge cases and all - but at least it is visible.)
I personally dislike the crypto world. In the very early days, it was a place of hope and possibility. But that was quickly buried by the waves of unethical people who were fixated on quick riches. And unfortunately, little of the potential or promises of cryptocurrencies have panned out. Meanwhile, at least in some places (Europe for example), financial transaction speed and associated costs have been reduced to well below what even crypto can offer. For example, I can move money from a Dutch account to a German account in one second, at no cost. There is no room for improvement there - ignoring the concept of anonymity of course... but that isn't really something crypto actually offers.
In the places where the banks themselves have not improved, new players have stepped in. Transferwise has saved me thousands per year for several years compared to international bank wires. Crypto can do that as well, but both endpoints then have to manage the fiat to crypto exchange.
To be fair to cryptocurrency in this regard, there has been intentional pressure from traditional financial systems to create laws that make it more difficult to exchange fiat and crypto, and that has greatly hindered some of the potential uses. Even that is evidence of how much more corrupt traditional systems are compared to cryptocurrencies.
[+] [-] traeregan|5 years ago|reply
[+] [-] shemnon42|5 years ago|reply
[+] [-] afrojack123|5 years ago|reply
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