EU passes world's first regulatory framework for cryptocurrency The European Union has given final approval to the first set of rules in the world designed to broadly regulate the cryptocurrency market. The Markets in Cryptoassets (MiCA) regulation, expected to come into force next year, places a number of rules on firms dealing in digital currencies, including that any organization …
It looks like the EU are making it harder to use crypto because they want to be able to control everyone with their own CBDC instead? So make it harder to use crypto.
Do I need a tinfoil hat, or is this just governments doing what governments do, and trying to get more control?
Also, it's going to be really hard for them to enforce this.
Lets see, there are two main uses for crypto currencies.
1. as a traded "asset" (ho ho ho, no it isn't, it's a tulip bubble with no tulips.)
2. as a means of moving money around for criminal transactions.
In the case of 1, anonymity is worthless, because if you're trying to hide your transactions from a government, there's not a lot of point, because you need to report any monetary gains from the transaction on your tax return when you convert it to a real currency.
In the case of 2, well, there's no argument that can justify anonymity there....
Pseudonymous is not anonymous. An anonymous transactional system would make it impossible to track links between transactions made by the same account. Almost all cryptocurrencies are pseudonymous, so all transactions made by the same pseudonymous account are linked by the pseudonym. I don't have to directly prove the terrorist transaction was made by you if I can link the real world funds added to that pseudonymous account came from you.
Real world money in, and real world money out, are obvious weaknesses here, so assume you want to commit crimes and live in a world were all your transactions live in the crypto world, and never link back to real world money. Does this mean you've defeated my master plan to link your criminal activity to you? No, because you live in the real world, and I just have to find one single pseudonymous transaction to you, and all your transactions are now linked to you.
It has been shown time and time again (and not just in the crypto, or criminal, worlds) that pseudonymous systems do not secure the identity of their users long term without significant operational security practices.
Yes it is possible to use a pseudonymous system anonymously, but it is very hard, and requires a deep understanding of operational security.
I would imagine that the EUs control of its citizenry will probably be done with mind control chips in your breakfast cereal or something in the drinking water.
It's not at all clear that CBDCs are going to work. Most everyone is looking at them, but not that many have actually been rolled out and its not clear that merchants in places where they are available are all that keen on accepting them. My guess is that they might be subject to many of the problems of credit cards and probably a few other glitches that no one has thought of but will be obvious once they are encountered. Time will tell if they are actually practical.
Even if they are a success, they will probably operate in parallel with physical currency and other financial media for many, many decades. Maybe forever.
It's not at all clear that CBDCs are going to work. Most everyone is looking at them, but not that many have actually been rolled out and its not clear that merchants in places where they are available are all that keen on accepting them.
There's no real reason why they shouldn't work given the majority of currency and transactions are digital already. Our bank accounts are already stocked with e-Pounds, Dollars or Euros and we swipe cards to move bits from our accounts to someone elses. It's only when we convert bits to bits of paper that the governments really lose sight of how we're spending their money. Hence the nudges to remove cash from economies. The main challenge is working in all the social and carbon credit bollix politicians want to introduce to regulate society.
One (potential) problem would appear to be counterfitting. Governments go to rather extreme lengths to make their paper currencies hard to fake. Special fabrics and dyes, hidden signatures, etc. And even then a small (but tolerable) number of fakes are created. It may be that there is simply no way to prevent folks from "printing" and somehow circulating their own digital "coinage". Unlike fake paper money, imanufacturing fake digital notes probably won't take any special skills beyond pressing/clicking ENTER on the right app. Getting the fake money into circulation without getting caught looks to be a lot harder. But we won't know for sure until we have some hands on experience with the stuff.
There may be some other problems. Does your digital paycheck vanish forever if your cellphone battery dies? How do I pay for an ice cream cone or a beer in an areas with no digital services? If the Central bank finds 27 copies of the same digital note, how does it know which, if any, is the original? Are there common, necessary, activities that allow easy injection of fake currency into the financial system. Or that allow theft of someone else's money?
Probably dozens of other things. Maybe all are tractable. Maybe not. Time will tell.
If the Central bank finds 27 copies of the same digital note, how does it know which, if any, is the original?
??!
Nobody has ever said that digital cash will be in the form of "bearer tokens" that you just pass across. As you imply, any pattern of bits is trivially duplicated - there will be no "digital note".
Instead, the ownership of digital cash will be tracked in a central ledger, held in a central bank. All transactions go via, and are notarised by, the central bank.
This is pretty similar to blockchain, except that there's no need for an expensive consensus mechanism: the bank is the bank. The bank stamps the transaction, and the job is done.
Will the ledger be private or public? My guess is that although it will be technically private, it will be open for inspection to so many government bodies and their outsourced suppliers that it might as well be public.
Will the ledger be private or public? My guess is that although it will be technically private, it will be open for inspection to so many government bodies and their outsourced suppliers that it might as well be public.
But.. what is the point of that? So rather than banking with whatever bank I want, and transferring bits in and out of my accounts with those banks, I can now only transact with the Central Bank? I can see why politicians might want this level of control over what we think of as our money, but I really don't see how this offers any advantage over the current system. Especially when the EU's been talking about 'benefits', like currency in CBDC digital wallets having a limited shelf-life.
I can't see why anyone would want to use it, unless they were forced to. I'm also curious why existing banks would want to give the central bank a monopoly on monopoly money. Perhaps the idea is they can off-load pleb accounts to CBDC, leaving the banks free to create ever more complex fiinancial derivatives aimed at their 'sophisticated' customers.
Not really, the banks that deal with the plebs are not the same banks that create derivatives and the like.
I do not know whether banks actually want this. If they do, they will want to offload tracking balances onto a central system (aka a single point of failure) to save money while they provide customer facing systems and do deposit taking and lending.
It is even more similar to how most money works now.
Only a small proportion of money is in the form of physical cash. Most of it exists as as electronic balances. It is something like 97% in the UK IIRC (the number is somewhere on the BoE website in the money supply numbers). It does depend on which definition of money you use but it is almost all regardless.
The UK already has a digital currency (its called the pound), and so does everyone else.
It is not one central ledger because central banks only record the balances of people who directly deal with them (banks, mostly) and banks and other financial institutions etc. record the rest.
Always need cash as an option.
Digital transactions are fine until systems go down - several times I have had fun in shops when external systems have gone down (so card payments not possible / cash machines down) - shoppers stuck either waiting for system to get back online or dumping their shopping and going home) but I have had a cash stash with me (always do) and so have been able to pay and go.
Lets also play tinfoil hat mode - in a digital only system linked to some form of person specific digital id or key then nothing to stop the government revoking the id / key of "undesirables" - and we will not just be talking dangerous terrorists, as we can see with the massively over the top sentences given to some stop oil protesters in the UK recently, state systems like disproportionate punishments as an attempt to control the pesky populace.
I always tip in cash - know from friends who do / have worked in the service industry that many places that supposedly take tips on card payments do not share it out fairly between the staff (often total amount given out between staff is a far smaller amount than all the customers "tipped" on the cards and the owners just naughtily creaming a bit more profit at expense of (poorly paid) staff who really need all their tips to make their pay decent)
"The Covid shot is entirely voluntary, you are not required to take it. However, as you are a risk to society for not being vaccinated, your ability to conduct CBDC transactions in any public establishments will be disabled."
Take Covid out and put in any other controversial topic.
"You made a post on The Register which was unsupportive of excessive government control. To reset your thinking, we are blocking your ability to buy groceries for the next 30 days."
CBDC is all about control. Don't think it won't happen.
The was kinda my point, but somehow I got 13 downvotes for saying that (and counting).
I mean, the Canadian government already did this with people's bank accounts because they didn't like their protests. Could happen anywhere when you get a so-called "liberal" leader who turns all authoritarian when things don't go the way they like. I guess it could happen in The Netherlands too with their protests. Scary times.
I do wonder whether the CBDC proponents/apologists have total faith in every future government being entirely just; believe that a future unjust government will surrender a tool of oppression; are happy to accept oppression as long as their opponents are oppressed more or simply believe they're the most badass freedom fighter in-waiting (who people will gladly follow, even when threatened with starvation for doing so).
It's a stark contrast to even the most extreme conventional cryptocurrency fanatics who will, at worst, use a bit of extra electricity and only lose all of their own money.
Ah, the Internet, where there is never any shortage of sophomoric ranting and generalization.
(JFTR, I'm not a fan of CBDCs, which appear to offer absolutely no advantages over anything except perhaps deliberately overpriced private-sector money-transfer services – and those already have other better-priced private-sector alternatives. But I'm also not a fan reading and re-reading the same vapid arguments I hear from not-particularly-informed high-school students.)
But that is the entire point.
I haven't had use of coins or bills since the beginning of COVID. Please explain to me why I would need a so-called digital money scheme when my official money is already digital and works fine.
Of course, I live in Europe, which has an efficient banking system.
Not like some other so-called first-world countries which actually live in the 1800s when it comes to managing money.
Please explain to me why I would need a so-called digital money scheme when my official money is already digital and works fine.
You don't, which is why people are right to be extremely suspicious that there at least 100 countries at various stages of implementing the idea:
https://www.imf.org/en/News/Articles/2022/02/09/sp020922-the-future-of-money-gearing-up-for-central-bank-digital-currency
CBDC is coming and it won't be for your benefit.
You don’t need it but governments want to tie your Digital ID to money.
CBDC’s will require an app on your phone. They’ll offer free money to download it and people will lap it up.
Once you submit all your details via the app the government can now track all of your movements and financial transactions. This removes all of your privacy and freedom.
Even here in the US cash is rarely necessary. I've used cash twice in the past month: once to buy a newspaper from the nice woman who sells them on the street corner, because I'd rather give her the business than just toss the paper in with my grocery purchase; and once because I stopped at a gas station where they'd lost their network connection, and since I had cash it was easier to buy fuel there with it rather than go on to the next place.
Both were by choice, in other words.
Some people like cash, for privacy, and I appreciate that. But as you say, CBDCs don't have that advantage, or any other apparent advantage over current digital payment systems.
"In other words, say goodbye to the so-called anonymity of cryptocurrencies."
Curious statement!
- Cryptocurrencies are anyway not exactly anonymous, they are at least pseudonymous (since each wallet ID is public). Also, analysis of transactions to/from certain wallet accounts can be used to de-anonymise (identify the actual account holder)
- EU citizens / residents wishing to stay pseudonymous can anyway buy crypto on a foreign-based exchange
- EU citizens / residents wishing to not disclose any crypto holdings can still hold them in an offline wallet
I don't really understand the workings of cryptocurrencies very well, but with a VPN, yeah, surely exchanges can be accessed and local Govts won't know by whom, so while I think regulation is a good idea, if they are unregulated somewhere, that's where the exchanges will end up. Who knows, maybe Britain will add EU law exempt Crypto Exchanges to it's portfolio in it's offshore tax havens / former colonies.
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Uh, sorry. I was there on cypherpunks. It was well understood that digital cash would enable criminal activity much more strongly than physical cash already does. It was considered a mostly-regrettable consequence of reducing the power of the existing banking-state complex. I say "mostly" because they were very inclined to challenge a lot of laws out there.
Remember, organizing a protest is criminal in a LOT of jurisdictions. If there is money involved? You need some form of cash, or you might as well just turn yourself in.
It is possible, but it is difficult to stay anonymous.
If a wallet can be connected to anything with which you can be identified, then all the other transactions in the wallet are tied to you. So, if you use the wallet to pay for something being delivered to you, or use it with a loyalty card, or use it to buy currency that is sent to your bank account, or anything else that can be linked to you, you are not anonymous any more.
So you need multiple wallets and to use mixer services and stay constantly vigilant. If you are a criminal user that means one slip up and you are caught.
" EU citizens / residents wishing to stay pseudonymous can anyway buy crypto on a foreign-based exchange"
Well, not exactly, if the crypto was bought with real money, and then sold for real money at a profit, it doesn't matter where in the world the crypto is, it's still subject to local tax laws where the crypto trader lives. Keeping the transactions and monetary gains anonymous and not declaring them is *already* breaking the law. The new EU regulation is just making it easier for the authorities to track down missing taxable income.
If you don't like the law, campaign to get it changed, don't just break the law.
"If you don't like the law, campaign to get it changed, don't just break the law."
That's what the Canadian truckers tried unsuccessfully to do. They didn't want to take the Covid shots, and Trudeau made it so they could not work. They then went to protest about that, and he shut down their bank accounts and stole all their donated funds + raided them and shut down their crypto.
Sometimes the law is wrong. And "campaigning" isn't going to help quickly enough.
If they launch their own and call it the "E-uro", I'm going to petition Mad Vlad to nuke Brussels[1].
Good taste demands it.
[1] Although the incompetent git would probably do it while the eurocrats were all "working from Strasbourg"[2].
[2] Like "working from home" only not at home and with less work.
The money laundering excuse again, the only thing it accomplishes is the to make it harder to move legal money around.
I recently moved 300k euros from an Asian country to a European country, legal , taxed money. One of the banks where I’ve been a customer for 50 years flat out refused to do it, didn’t even wanted to tell me what their requirements to allow is. My other bank required a lot of paperwork including a personal letter from the manager of my Asian bank, with a verified translation and the complete transaction history. I bet if I was a billionaire drug runner it would have been much easier…
Is this really some kind of world-first by the EU? I was under the impression that Japan, for example, already regulated cyptocurrencies, including requiring registration of exchanges with their financial services authorities, compliance with AML regulations, the identification of senders and beneficiaries, etc. Indeed, I seem to remember it being noted here in an article on the FTX debacle, that in Japan the regulations on cryptocurrencies meant that there was a great deal more protection than was the case elsewhere.
My first thought is that these rules will just give these "assets" a veneer of respectability as an investment, when it would be better to just point out that they're nothing but speculation, intrinsically worthless, regularly subject to scams and a really bad idea to put your money into.
Unfortunately this does nothing to solve the criminality and money laundering issues, but if enough people stop foolishly putting their money into them they will collapse as a store of "value" anyway, which ultimately would be the only way they stop being used for these purposes.
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It's a remarkable store of value with ultimate portability and absolute self-custody. There's also none of the inconvenience of gold, namely it's high density and the problem of keeping it secure. No wonder governments and the supranational elites detest the concept!
I wonder if there'll ever be an Executive Order 6102 for digital currencies? For the ignorant, EO 6102 was Roosevelt's gold grab in 1933. It always amazed me that residents of the supposed "Land of the Free" tolerated such a seizure, but apparently it was highly successful.
Remarkably, even the gold belonging to foreigners was brazenly stolen:
Foreigners also had gold confiscated and were forced to accept paper money for their gold. The Uebersee Finanz-Korporation, a Swiss banking company, had $1,250,000 in gold coins for business use. The Uebersee Finanz-Korporation entrusted the gold to an American firm for safekeeping, and the Swiss were shocked to find that their gold was confiscated. The Swiss made appeals, but they were denied; they were entitled to paper money but not their gold. The Swiss company would have lost 40% of their gold's value if they had tried to buy the same amount of gold with the paper money that they received in exchange for their confiscated gold.
https://en.wikipedia.org/wiki/Executive_Order_6102#Prosecutions
And just remember folks, governments everywhere, just like a lot of the inhabitants of this forum, will claim that gold is a worthless yellow metal. Doesn't seem to stop them acquiring it at ever increasing rates though.
We hear the very same tired arguments aimed at cryptocurrencies from the very same people. My advice? Don't believe a word of it!
More recently was the Greek Haircut, where the Greek government closed the banks on a Friday to raid customer accounts. When the banks reopened people with a lot in the bank found they didn't have as much anymore. Make everything digital and they'd not even need to close the banks, just run a midnight script and bang, half your account is gone.
The EU will say anything to introduce Digital ID. When you download that friendly government CBDC app your privacy and freedom have gone.
Let’s create loads of fear around crypto being bad so we can save everyone:
“U.S. Treasury Department says that fiat still accounts for the majority of financial crimes.”
“Chainalysis found that the share of illegal money in crypto is only 0.15% of all transactions in 2021.”
https://beincrypto.com/fiat-still-accounts-for-the-majority-of-financial-crimes-us-treasury-department-report/
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