Bitcoin network fees dropped

Lawyer: The authorities opened an ideological war against independent storage of cryptocurrencies and privacy

Recently, global authorities have taken a number of regulatory and enforcement measures in the cryptocurrency industry. Lawyer Jake Chervinsky believes that what is happening cannot be described in any other way than as an “ideological war against self-preservation and privacy.”.

He notes that the infrastructure of the cryptocurrency markets has undergone significant changes over the years. Now people can quite easily transfer traditional currency to digital, withdraw any amounts to their wallets and dispose of them at their own discretion without restrictions or identification. Users have to fulfill certain conditions when interacting with fiat channels, but in general they are free to enjoy all the other benefits.

“This is changing,” Chervinsky writes. – Legislators’ approach to AML-regulation is significantly shifting towards more stringent restrictions at the global level “.

The lawyer explains that AML regulation is intended to make criminal activity impractical. For this, financial institutions are endowed with the status of government agents responsible for identifying customers, analyzing transactions and submitting reports to the responsible authorities..

“AML regulation relies on intermediaries, but does not work with paper and electronic money, because without intermediaries, the authorities’ ability to track transactions, identify counterparties, determine the source of funds, censor and confiscate funds becomes limited,” he adds..

Some countries are trying to get rid of cash, but paper money does not pose the same risks as electronic money, since it is difficult to move.

“Regulators are much more worried about digital transfers,” the lawyer writes. – For many years they have limited digital transfers through financial institutions. Nevertheless, in addition to periodic messages like “Country X bans bitcoin”, most states did not try to significantly restrict transactions of bitcoin and other cryptocurrencies “.

According to Chervinsky’s observations, in the past, authorities have been content with controlling fiat channels, assuming that it is from them that the main value of cryptocurrencies comes. In addition, the volume of criminal activity with cryptocurrencies is relatively small in order to allocate huge state resources to fight it..

“However, over the past year, bitcoin has gained geopolitical significance and the volume of transactions with fiat-tied stablecoins has skyrocketed. As a result, the authorities are increasingly worried about illegal activities and threats to their currency sovereignty, “he adds..

As a result, they are beginning to actively apply the AML requirements. The lawyer notes that many expected the BitMEX crypto derivatives exchange to be prosecuted by the Commodity Futures Trading Commission (CFTC), but the criminal case initiated by the Ministry of Justice transfers this situation to another category. According to Chervinsky, such measures are rarely used..

In addition, last week the same Ministry of Justice published a regulatory framework for regulating cryptocurrencies, in which it explicitly calls anonymous transactions “high-risk activity, indicating a possible criminal act.” The Ministry of Justice also called on companies “deciding to offer products based on cryptocurrencies with increased privacy” to take into account the risks of money laundering and financing of criminal activity arising in this connection. The lawyer states that this text should be considered a warning about the likely negative consequences for such companies..

“More importantly, lawmakers around the world are making it clear that they want to expand existing requirements to restrict access to cryptocurrencies,” he writes..

As an example, Chervinsky provides an interpretation of the requirements of the Financial Action Task Force on Money Laundering (FATF) to collect data on users of cryptocurrencies in Switzerland. There, regulators decided that clients of exchanges cannot withdraw cryptocurrency to their personal wallet if they do not first identify it. The lawyer sees this as a ban on self-storage of cryptocurrencies under the pretext of identification requirements. He admits that as early as next year the FATF can extend this requirement in the same format to all countries..

He also cites an excerpt from a Bank for International Settlements report on central bank digital currencies, published last week: “Complete anonymity is not acceptable.”.

“I am afraid that we are moving into a future in which the withdrawal of cryptocurrency from the exchange to our own wallet will be limited as a means of attacking privacy. There will be two markets: one for “clean” custodian coins, and the other for “dirty” coins that users will store themselves. There will be no connection between them. This is the worst-case scenario, and all hope is not yet lost. However, you should know that this is an urgent problem and the main challenge for us that we will have to overcome in the coming years, ”he concludes..

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