[ad_1]
Banning Bitcoin is a bad idea
New Atlanticist by JP Schnapper-Casteras
Representations of the Bitcoin virtual currency stand on a motherboard. Illustration by Dado Ruvic / Reuters.
It’s been a busy month for cryptocurrencies, between volatile markets and Elon Musks Dogecoin’s antics on Saturday Night Live. In the midst of it all, a small chorus of business leaders, current and former policy makers, and commentators began to reflect on the total ban on technologies like Bitcoin in the United States. This proposition arises for different reasons and to varying degrees of seriousness. To take such drastic measures, however, would be reckless and short-sighted.
Much debate rages on whether Bitcoin is good, bad, or ugly. But the general suggestion to ban Bitcoin raises three broader issues, regardless of the perspective on a given cryptocurrency.
The first is the overarching principle of technological neutrality that we must develop policies and laws that apply equitably across technology and time. For example, if we say we don’t like Bitcoin because it can be used by bad players, would this position also apply neutrally to other technologies and financial instruments? The bad actor scenario could also happen with a gym bag full of $ 100 bills. The US Treasury Department has printed about twelve billion $ 100 bills, 80 percent of which are in circulation outside the country. Additionally, would a Bitcoin ban also apply to other digital assets that cost more than $ 30,000 (Bitcoin’s current value) or $ 10,000 or even $ 1?
Second, we need to think about what a tough ban would actually mean for an asset currently owned by approximately forty-six million Americans. Would the plan be to prosecute anyone who does not hand over their Bitcoin and threaten them with jail time? Criminalizing 14% of the American population for the simple possession of encryption keys would constitute a form of mass incarceration that is, among other things, contrary to the current political consensus on criminal justice reform. How many thousands of legal proceedings would the confiscation of all those Bitcoins require? Does the federal government plan to reimburse citizens for the billions of dollars in property it confiscates? (For comparison, in the 1930s the U.S. government ordered restrictions on certain uses of gold, which have been the subject of intense litigation and were closely upheld by the Supreme Court. Notably, the right to own gold was reinstated in the 1970s.)
Third, democratic values must inform US policies regarding cryptocurrencies. Over the past week, Chinese Vice Premier Liu He launched a crackdown on bitcoin mining and trading, and Iran imposed a strict ban on mining. In response, a former senior Treasury Department official said the United States should follow China on this and really crack down on crypto. But China’s record of repression both online and in the physical world is not something the United States should blithely seek to emulate. Democratic nations do not unilaterally clamp down on things that some might hate. We deliberate, promulgate regulations and / or pass laws. Additionally, the United States regularly and rightly criticizes other countries, especially China, for cracking down on an open internet, which should make Americans think seriously about flirting with an outright internet protocol ban.
Other commentators have made sweeping claims like saying that the privacy features of some cryptocurrencies are primarily useful for criminals. This is completely inaccurate from a legal and historical point of view. The late United States Supreme Court Justice Louis Brandeis extolled the importance of privacy rights in the 19th and 20th centuries. Congress overwhelmingly passed a law called the Right to Financial Privacy Act in 1978, and the Supreme Court ruled that privacy underlies other important constitutional rights. Privacy is an enduring American value that applies to everything from the sanctity of our homes to the right to purchase contraceptives.
The Colonial Pipeline hack raised new questions about whether the Bitcoin ban could help defuse the global ransomware problem, but ransomware predates the adoption of cryptocurrency. For example, in 1989, a large-scale ransomware attack on scientists forced them to send a cashier’s check or money order to a PO Box in Panama. People sometimes do bad things with paper money, including using it to pay ransoms. Rather than attempting to ban the last medium of exchange, it would be better to strengthen cyber defenses at the corporate and country level. Crypto ransom payments aren’t completely untraceable either: an analytics company that works with law enforcement has already managed to start tracking the Colonial pipeline payment. Try this with a bunch of Benjamins.
Constructive conversations await on the proper regulation of digital currencies (plural). For example, how to encourage the use of renewable energies for more electricity-intensive cryptocurrencies, protect consumers from excessive risks and find money launderers who take advantage of new technologies? These are legitimate questions that require careful consideration. What is needed now is more coordination between agencies within the US government and clearer rules, rather than regulatory fiefdoms and piecemeal enforcement. But concrete progress will not start by one day waking up, ranting at the latest Bitcoin price and thinking about a crackdown. This is more of a feverish dream than a serious policy, and that should subside soon enough as cold heads prevail.
JP Schnapper-Casteras is a non-resident senior researcher at the Atlantic Councils GeoEconomics Center and a practicing lawyer.
Further reading
Tue 11 May 2021
QUICK THINKING: How to Stop the Next Pipeline Hack
The hack has been linked to an Eastern European (and possibly Russia-based) collective known as DarkSide and US President Joe Biden has said Russia bears some responsibility for the hack, although the attack does not appear to have been sponsored by the state. How can businesses fight this growing trend of ransomware attacks? What can the Biden administration do?
Fast Thinking by the Atlantic Council
[ad_2]
picture credit