Shut up and freeze my fedcoins!
I read Biden's executive order on cryptocurrencies so you don't have to
The year is 2030.
You are expecting your weekly deposit of 200 FedCoin to arrive in your wallet today, but when you wake up and check your balance, there has been no deposit. A red alert pops up on your fridge to inform you that your funds are being held hostage while an anonymous claim against you is investigated. Someone has reported you for violating global community standards, but no matter how many times you shout “MORE INFORMATION, PLEASE!” at your refrigerator, no more information is forthcoming.
It happens from time to time, and by now you’ve learned to navigate around the inconvenience as best you can. Unfortunately, you can’t use your BitCoin or other crypto wallets during a FedCoin freeze, because the licensed exchanges are prohibited from facilitating your transactions.
But there’s a shady dude at the community rideshare terminal in the mornings who will let you ride to work in the trunk for two cigarettes and a half pound of dry beans. You save up your beans from each monthly food distribution package just in case you need his services. The cigarettes you get from a neighbor who smuggles them in from Mexico, in exchange for the unlicensed microgreens that you grow in your living room. It’s not the best arrangement, but it’s workable.
Of course, a frozen wallet doesn’t just affect your ride to work. It also means no amenities or entertainment until the powers that be decide to unfreeze you. No extra five minutes on your twice-weekly shower, no premium movies from HuluFlix, and no Saturday dinners at the community kitchen, where they sometimes have meat. You’re stuck with short showers, old entertainment content with all the good jokes censored out, and the bland calories from your monthly nutrition allotment.
This is not the shining, decentralized financial future you had envisioned back during the crypto boom of the 2010s and 20s, when you invested quite a bit into cryptocurrencies and even bought a few NFTs. It all started when that one president—the one with dementia, what was his name?—issued that executive order.
Biden’s EO: A Summary, Read Between the Lines
The mix of reactions I’ve seen over the past week to the news of Biden’s executive order on cryptocurrencies and digital assets has been interesting.
Some people are saying “Finally! The federal government is going to issue specific rules for the crypto market so that we can all be sure we’re in compliance with the law. This is a great thing for crypto!”
Others are feeling more ambivalent. “Whatever. Statists gonna state.”
And still others think that this EO will drive the last nails in the coffin of crypto freedom.
I fall somewhere between the second and third points of view. On the one hand, the future regulations vaguely alluded to in the EO will definitely be aimed toward centralizing and controlling the crypto market, which kind of defeats the purpose of crypto. The future envisioned in this post’s introduction is what might happen if that plan succeeds. But on the other hand, there’s no guarantee it will.
So, what did I learn from reading Biden’s executive order on digital assets, besides the fact that whoever writes these things for Uncle Joe is not a fan of the Oxford comma?
If I had to summarize it in a few sentences, the crux of the order is this:
We are interested in cryptocurrencies and digital assets because of our constant need to reassert our supremacy in the realms of global finance, tech, and international bullying, as well as because of the massive additional revenue streams these innovations can provide our tax collectors. But at the same time we are deeply perturbed at the anarchic nature of this beast. We definitely do not like the fact that blockchain technology attempts to leave us out of the international finance equation. Despite appearances to the contrary, we are still totally relevant and you still need us. Therefore, in an unsurprising continuation of our perpetual mission to dominate, control, and leech off of markets and people, we are going to try and tame this wild animal through our usual methods of meddling, restriction, and surveillance—though we are cloaking our true intention beneath marketable slogans such as “risk mitigation”, “consumer protection”, “crime prevention”, and “environmental protection.” It is with this purpose in mind that I, Uncle Joe, am now directing the alphabet soup of U.S. agencies and regulatory bodies to prepare reports, assess conditions, and “develop frameworks” for the implementation of regulations on cryptocurrencies and digital assets and for the eventual introduction of a United States central bank digital currency (CBDC).
What is the purpose of the order?
Regardless of your stance on cryptocurrencies, this order should be seen as an attempt by the Biden administration to take firm action get the ecosystem under its control.
The fact that this EO was issued at all is evidence that the current administration considers cryptocurrency an important enough problem that Congress should not be allowed to decide what to do about it. What is an executive order, after all, but a way for the executive branch to circumvent the legislative process, bypass checks and balances, and unilaterally pursue its objectives through regulation?
Beyond the broad scope of taming the crypto beast, the administration lists a few specific concerns and directs a smorgasbord of U.S. bureaus and agencies to address those concerns through “reports” and regulatory schemes. These are, in no particular order:
Consumer protections to limit people’s choices in order to prevent them from losing their shirts on crypto investments.
Environmental regulations to ensure the growth of crypto mining doesn’t counteract all of the draconian impositions the government is planning to burden us with in its effort to “combat climate change.”
The need for international pressure to make sure other countries deal with crypto in a way that is acceptable to the U.S. government.
Establishing a robust network of law enforcement and intelligence sub-agencies to address the use of cryptocurrencies by criminals and terrorists.
Developing a scheme for the implementation of a central bank digital currency to be issued by the Federal Reserve. Fed Chairman Jerome Powell has been personally tasked with “develop[ing] a strategic plan for Federal Reserve and broader United States government action, as appropriate, that evaluates the necessary steps and requirements for the potential implementation and launch of a United States CBDC.”
The “best” parts of the order
I won’t bore you with all the inane details, but I will share a few of my favorite bits. There are a few passages that stand out, including this gem of a freudian slip:
While many activities involving digital assets are within the scope of existing domestic laws and regulations, an area where the United States has been a global leader, growing development and adoption of digital assets and related innovations, as well as inconsistent controls to defend against certain key risks, necessitate an evolution and alignment of the United States government approach to digital assets.
Lol, so the United States considers itself a world leader in making laws and regulations? I can’t tell if this is an intentional double-entendre or a simple grammatical error, but either way, it checks out.
And the following quote from the section on safeguarding human rights is deliciously ironic.
The United States should ensure that safeguards are in place and promote the responsible development of digital assets to protect consumers, investors and businesses; maintain privacy; and shield against arbitrary or unlawful surveillance, which can contribute to human rights abuses.
Aren’t we so fortunate to live in a country where our government values privacy and definitely never resorts to arbitrary or unlawful surveillance? Except, of course, for odd, isolated cases such as when police conduct tens of thousands of warrantless vehicular searches and seizures per year, when the FBI does warrantless surveillance of emails, or when the NSA spends $100 million to collect and store the phone call details of private citizens.
Luckily, Uncle Joe has our best interests at heart when it comes to cybercrime and other criminal operations.
Digital assets may pose significant illicit finance risks, including money laundering, cybercrime and ransomware, narcotics and human trafficking, and terrorism and proliferation financing.
It’s nice of them to establish a category of crime that includes money laundering (a crime against the state) as well as human trafficking (a crime that victimizes real people.) That really clarifies for me who the order really seeks to protect.
And I love how the United States government always conveniently forgets that its own fiat is the most commonly used currency by criminals for criminal purposes. Should we say the same of the US dollar? That it may pose significant illicit finance risks, and should therefore be even more heavily regulated and closely monitored? Oh, right. That’s what the CBDC is for: to enable complete knowledge, surveillance, and control of how much money you have, where it comes from, and how and when you can spend it.
The United States derives significant economic and national security benefits from the central role that the United States dollar and United States financial institutions and markets play in the global financial system. Continued United States leadership in the global financial system will sustain United States financial power and promote United States economic interests.
Is it just me, or does this passage reek just slightly of desperation? It’s the way it’s worded. It seems to lack confidence. As if perhaps the United States is aware that the United States dollar is in imminent danger of NOT playing a central role in the global financial system, due to the United States’ own irresponsible management of said dollar. As if perhaps the United States views crypto (and a CBDC) as its easy path out of the colossal mess the United States has created of its own currency.
Hmm. I wonder how that’s going to play out for the United States?
The United States must continue to work with international partners on standards for the development and appropriate interoperability of digital payment architectures and CBDCs to reduce payment inefficiencies and ensure that any new funds transfer and payment systems are consistent with United States values and legal requirements.
NO. No, you really don’t. There are multiple existing crypto projects that have already solved the problem of “interoperability of digital payment architectures.” If you would just stand back and let them do what they’re designed to do, we could have already jumped this hurdle two or more years ago.
In the meantime, stop saying “work with” when you really mean “strong-arm.”
Whether the U.S. will succeed in its mission of centralizing crypto remains to be seen.
It’s definitely easier said than done. Most crypto projects were designed with decentralization as a primary feature. They literally can’t be centralized. However, access points can be, and that’s what gives meddling governments an advantage. What good is crypto for decentralizing financial markets and promoting freedom, if the government can require exchanges to enforce its code of suck, and shut down any that refuse?
I’m rooting for decentralization, of course.
Thank you for reading!
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-Starr
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One of these things is not like the others. One of these things just isn't the same.
I hate the Oxford comma. Why, oh, why is anyone still using it?