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Bitcoin United States

Washington Turns Hostile on Crypto (axios.com) 83

A year ago, crypto successfully scraped and scrapped to get a foot in the door in Washington. But in the wake of crypto's winter, and FTX's spectacular collapse, that door has now slammed shut. From a report: Gaining legitimacy in Washington has been an essential part of the industry's push into the mainstream. But a series of recent announcements from the Biden administration suggest there's a crackdown ahead.

The vibes from the White House and federal agencies have been somber at best for anyone trying to run a cryptocurrency business. Over the last two weeks, government officials repeatedly gave crypto the cold shoulder. First, a crypto-friendly bank was firmly denied its request to join the Federal Reserve system. Custodia Bank, which believed it did everything by the book, was blindsided. On a larger scale, the Fed's rejection of Custodia was a major blow for an industry that's always envisioned disrupting traditional finance. To do that, it needs direct access to the systems that underpin it, including the Fed's payment network.

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Washington Turns Hostile on Crypto

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  • Crypto promoters have been sending lots of money to politicians. I think the recent scandals have put a damper on the politicians' enthusiasm. (I read that FTX is even asking politicians to return donations... good luck with that.)
    The obvious solution is for them to increase the bribes. That will buy them time to continue their scams.

    • The obvious solution is for them to increase the bribes. That will buy them time to continue their scams.

      Yup. When politicians turn hostile to some industry, what they're really saying is "where dat money at?" Once the right palms are greased, those regulatory hurdles become a lot less daunting.

      • by whitroth ( 9367 )

        Really? So, they just wanted more bribes from the tobacco industry when they started shutting it down?

        Or maybe - I know this is an absurd thought - they started when they were getting screamed at by the people who *vote* for them to do something?

        • Big Tobacco gave up on Big Tobacco. The parent companies all moved on to other things. Cigarettes were a dying business and they knew it. By the end when the government all but outlawed cigarettes, the parent companies didn't even care anymore.

          • And yet I still have coworkers that smoke and you can still buy cigarettes at the grocery when you go through checkout. They sure showed them!!!

    • by whitroth ( 9367 )

      Um, let's see: Beto O'Rourke returned the donation *before* the FTX meltdown. Other Dems are looking at returning the money.

      GOP? What? Oh, look, see the Jewish Space Lasers over there!

      • by Q-Hack! ( 37846 )

        FTX donated $262,200 to a few of the GOP Rino's. They donated $40 Million to the Democratic campaigns. The $1 Million that Beto O'Rourke returned was a drop in the bucket. Symbolic? Yes, but will not amount to much for the $8 Billion lost to investors.

        But by all means, use it to denigrate the the GOP who were, in effect, not involved with the scandal.

  • by Anonymous Coward

    The plan for all cryptocurrencies isn't what they want to make you think it is. It's more sinister than the egalitarian image the crypto boys portray for it.

    After the 2008 financial meltdown, cryptocurrencies were born out of it, declared to be the means by which people could be freed from banks/governments, and promised to avoid any such future meltdowns from happening ever again.

    But the crypto boys watched closely the result of that meltdown, and formulated their plan: create a new form of currency, and

  • Take note, there is no such thing as a per se financial industry. Financial services industries provide services including loans and insurance.

    Likewise, static cryptographic ledgers such as "BitCoin" (BC) have absolutely no need for 3rd parties to be involved in a transaction. If two parties were interested in transferring "BC" credits (denominated in units of 1/1e8 BC, or one hundred millionths) they simply exchange signatures and wait for the public ledger (not a concrete third party, but rather a pure a

    • You trying to give someone an aneurism quoting the Bible on a site for nerds?
      • We discussed this in the format I've presented it during 2006 - 2007, pre-release. "Braid of strands" is known by the common word "whip". The story of the money changers isn't explicitly elucidated in the book and it is difficult to find reliable sources from two millennia or so ago. Our ideas were though that one thing never changes: humanity and our base emotions and desires. The author of the sourcecode said he was interested in moving on to Linear A [wikipedia.org] which to date lacks a viable deciphering.

        I've thought

    • by Anonymous Coward

      The fun thing is that in Roman times it was perfectly normal to do business in temples. If you needed a loan, you'd go exactly there, for that's where you knew you could find lenders. They were nice and safe places, being holy and all, and in that sense provided a(n additional) public service. Not unlike the sanctuary churches still offer, now and then.

      Not saying the guy was wrong to kick 'em out, just that the cultural setting was a bit different back then than we're used to now. (Romani ite domum.)

      Or, t

      • I don't mind calling it "the book" in so much as worshiping it contradicts "no graven image". I understand "God" to mean objective reality, and therefore taking as fact anything other than fact ("take no other God before me") would be foolish. Ancient spoken-word stories were passed down by representing ideas and concepts as characterizations. This is obvious in the "book of Job" which represents reality as "God", accusations as "Satan" and honesty as "Job".
    • Its a terrible experience for everyone barebones without any intermediaries. The services exist and came to exist after the barebones bitcoin network was up, because it sucks. Bitcoin as a currency has failed. Lightning network, kinda works, but that is absolutely not peer to peer, relying on a series of tunnels to other orgs.

      The whole thing sucks. You could make it suck less with third parties, but its kind of like strapping a engine form a 93 honda civic on a catfish. No part of that makes sense. It is n
      • The author told me he was "moving on to other things" which was quite a lot of change from the excited "it works!" I'd heard. The general idea is reasonable and that was really what we'd wanted to sell. I disagreed immediately once I heard of the "proof of work" in detail, albeit I didn't mind the idea that burning diamonds for BC was nearly as humorous as burning fossils to propel your Flintmobile. In the end, although humanity was doing well enough destroying precious non-renewable resources I felt that t

    • by Voyager529 ( 1363959 ) <voyager529@yahoo. c o m> on Monday February 06, 2023 @12:53PM (#63269511)

      What is being rejected is the money changers in the temple!

      He found in the temple those who were selling livestock, as well as those exchanging currency. He made a braid of strands and chased them all out. He scattered the coins and overturned the tables of the money changers. He said to them, “Get these things out of here! Don’t make my Father’s house a place of business.”

      I agree with what you've said, but I'd like to address the scripture verse (Matthew 21:12–13, John 2:15–16) posted here because it's absolutely incredible when the cultural context is incorporated...and there are several.

      So, first up, let's go back to Exodus 12:4 where the sacrifice of a lamb is first established: " Tell the whole community of Israel that on the tenth day of this month each man is to take a lamb for his family, one for each household." This is corroborated in Leviticus 1:1 when the law regarding sin offerings is established: "Tell the whole community of Israel that on the tenth day of this month each man is to take a lamb for his family, one for each household." The commandment indicates that it's supposed to be a lamb from one's own flock, about a year old, with no broken bones. Sin was transferred from the man (representing his household) to the animal, and the animal's death covered the sin of the household. This animal tended to be more of a pet than regular livestock; its death for the sin of the household held significance. One of the things Jesus was objecting to was the temple giving people the ability to buy an animal on the spot, basically allowing the wealthy to pay for their sins to be atoned for by writing a big enough check and walking away. That...didn't work.

      Next up, those money-changer tables were set up toward the front of the temple, creating a choke point to ensure that only the 'right' people could enter the outer court of the temple. While Levitical law had many, many entries relating to 'foreigners living among you' that only had a handful of exceptions (a converted Jew couldn't become a high priest, for example), those tables were set up in a way that made it far more difficult for the 'wrong' people (e.g. the Samaritans) to be able to honor God. This...was a problem for Jesus.

      Then, there was the added fun of how they ran business. Suppose you did, in fact, bring a lamb for sacrifice that satisfies the requirements of Leviticus 1. It wasn't uncommon for them to find some random dirt patch or 'evidence of a broken bone' and say the lamb was unfit for sacrifice...but they'd buy it for $1 in 'store credit' for one of the lambs they had for a sacrifice that was appropriate. Then, they'd do the same thing to the next guy, and miraculously, the lamb that was unfit for the man who brought it, was suddenly acceptable for the man they sold it to.

      Finally, there was the money changing itself...if you've ever exchanged currency at an airport, you know the racket...now do that with temple currency where the people at the tables were setting the conversion rates for 'temple currency', which was the only acceptable money with which to buy a sacrifice.

      I'm sure by now, it's pretty obvious what was going on...which is why Jesus responded in that way.

      I'm sure I'll get modded off-topic (which is fair; TFA is about Cryptocurrency), but I appreciated having an opportunity to share this because it makes so much more sense in context.

      One last thing, to the mods: Can we please stipulate "Washington, D.C." when referring to the capitol of the United States, and "Washington State" when referring to the northwest province of the nation, home to the Space Needle and Microsoft's HQ and the Washington Commanders?

      • I certainly appreciate discussion about the verse(s), although it's very difficult to source anything corroborated or to verify much in detail. I described the idea I recalled reading about in far more loose terms (from my post above):

        I'd like to explain my understanding of it to the best of my current knowledge, nonetheless. The money changers were offering coupons that were useless outside the temple. The livestock and goods sellers were selling materials required for an offering to be made at the altar

      • home to the Space Needle and Microsoft's HQ and the Washington Commanders?
        Brah, the Commanders are the former Redskins, they play in Landover MD which is now where near Washington State, but is proximal to Washington D.C.
      • Man, religious people just love to post these long made-up fairy tales about biblical interpretations they just came up with (if anyone enjoys this, places like SE Christianity is all this every day). There's no citations of support about these claims for practices of treating sacrifices as pets, or tables as chokepoints, or anything. And somehow it gets upvoted because people are impressed by seeing a lot of verbiage, I guess.

        they'd buy it for $1 in 'store credit' for one of the lambs they had for a sacrifice that was appropriate

        Obviously there's no way that can be literally true. As just one highlight from t

  • Real reason (Score:4, Funny)

    by theendlessnow ( 516149 ) * on Monday February 06, 2023 @11:55AM (#63269343)
    "We just want affordable gaming GPUs!!"
  • What a surprise (Score:3, Insightful)

    by smoot123 ( 1027084 ) on Monday February 06, 2023 @12:04PM (#63269363)

    Washington and financial regulators have been hostile to crypto since day one. They have no incentive to support alternatives to centrally backed fiat currencies.

    That being said, I think there are three things at play here and we should be clear which we're talking about. First is crypto as a currency. I buy and sell stuff using Bitcoin instead of dollars. This is not what gets the headlines and it's still kind of a fringe thing. It's also not clear how that could be regulated. Second are companies providing digital wallets so I don't lose my coins because I lost a password. I don't think anyone gives a hoot about that, although it undermines the "crypto is private and anonymous" sales pitch. Finally there are crypto trading companies which trade crypto as an asset, much like stocks, gold, and options. That's what is getting the attention and ire of regulators. That's more reasonable than I'd like to admit: companies offering essentially Bitcoin mutual funds should probably follow the same regulations as a company offering port belly funds. But TBH, I think this is the least interesting part of crypto and kind of wish it would go away.

    • The fatal flaw was crypto proponents using the tech to try and supplant the USD which was always silly and pointless and crypto is nowhere near such a task, that's where all the crypto as asset garbage comes from even though ironically they sell assets based on USD.

      The more boring but maybe realistic goal would be for it to take on payment processors and just accept that crypto "value" will always be measured in "actual" currency.

      Almost every place I have seen or used BTC for a transaction pegs the price to

      • The original intention wasn't in fact to "supplant" the United States Dollar, but rather provide a new, completely online, theoretically anonymous (given anonymous IP like a 2007 macdonalds/starbucks WiFi) medium of exchange. What if you wanted to pay someone to rip and offer that torrent? What about that questionable cracking or programming job? What if you were Russia and wanted to access western markets you'd been banned from?

        Providing this alternative was the original intent. The idea was that currency

        • It's a chicken and the egg issue though. Even pegging to energy, well, energy is priced in USD.

          If crypto was always just essentially a black market transaction method then great, it works for that, but let's all stop pretending it's anything else.

          Having a means of exchange is based on stability of value and all crypto is miles away from that.

          Should probably remind the majority of the crypto scene the intention was never to supplant USD because they are all still huffing that copium.

          • What do you mean pegging? Ancient tribes used seashells or grains of corn for exchange, it just wasn't very practical to trade 12 tonnes of corn for a horse and saddle.

            Energy has the issue that all known processes (see special relativity) involving energy <> mass are lossy in terms of entropy expanding outward and being lost. What we'd need to achieve "AD" is some new physics that would allow that transmutation at approximately 100% efficiency.

            • In a small agrarian society the value of a shell or a grain of corn can be settled amongst each other in the community, there's a common frame of reference for what a shell is worth in commodity form. Crypto doesn't have that without existing fiat currencies. Overcoming the history and stability of existing currencies in a global marketplace is an almost impossible task.

              Entropy of energy is way over concept for the economic issue being discussed, replace energy with widget Without referencing any fiat c

              • Those are all part of the entropy of the complete system. We don't have any means of transmutation like Star Trek Replicators, as of yet. That said, the efficiency must be low for the scheme to work in the sense of advantage to early adopters. This obvious fact is one reason I didn't like the design, but it seems others insisted that such was a requirement for a functional system to materialize at all.

                I still can't exchange any of these tokens for material goods or services without at some point exchanging

            • Pegging, currency wise, is when one currency is supposed to be fixed in valuation in relation to another.

              So, I could print off some "money", call it "dinero". Say that its value is 1:1 with USD, given that I have a vault of USD and will hand out $1 per dinero. As long as my vault holds out (it'll help if I can also get a bunch of merchants taking dinero so that the first stop isn't exchanging it for USD all the time), it's 1:1. Pegged. Though it doesn't matter if the ratio is 1, 10, 100, or 7.6259.

              You c

      • I think the original point was to create an alternative to fiat currencies the dollar included. An alternative which could not be inflated or tracked by a central authority (such as the US federal reserve). I suspect the hope was it it would indeed prove more attractive than fiat currencies and eventually supplant them. Not sure why you'd call it pointless to replace something bad with something better (assuming one believes crypto really is better).
    • There are a few main pushes for cryptocurrencies:

      * Its decentralized. Yes, and no. Problem is that it can take a while for a BTC transaction to go through the blockchain, and the transactions are very energy consuming.

      * It is anonymous. Wallets are, but once a transaction is done, it is now linked, and with all the money thrown at hunting connections between wallets, even using tumblers may not be sufficient, and there is always the issue of tainted coins. You might be able to move to and from a curre

      • For those who aren't up on financial regulations (Sorry ctilsie242),
        KYC: Know Your Customer
        AML: Anti Money Laundering

        Basically, KYC is intended to prevent banks from servicing criminals such as terrorists and the bigger drug dealers. AML is intended to prevent criminals, such as terrorists and drug dealers and such from "whitewashing" their money.

        Ergo, the modern banking system is quite anti-privacy. Well, average people have quite a bit of privacy from people they'd realistically care about, because the

  • by DarkOx ( 621550 ) on Monday February 06, 2023 @12:05PM (#63269367) Journal

    They basically have a duty to ban Crypto.

    As long as the Republic stands, its hard to see how it would possibly promote the general welfare for competing currencies to exist.

    or if its a commodity - what possible reason is having virtual commodities good? We have plenty of commodities you can speculate on already, at least by virtual of them being some real thing speculation in them triggers some production interest an society gets something it can eat, build with, heat with etc for its inputs.

    We already have practically limitless synthetic financial instruments on top of that real stuff to lube up financial markets, well beyond where we even understand the interconnections. Crypto is basically issuing your own scrip, we don't let banks do it, we don't even let States do it. Why on earth would we let some-guy-on-the-internet do it? I am about as much the radical-free-market-capitalist as you'll find but even I recognize issuing money is pretty much a fundamental role of government.

    • by Anonymous Coward

      I am about as much the radical-free-market-capitalist as you'll find

      You like to think that you are but, as is almost always the case, you aren't committed to it in principle you just support it when you think it benefits you. Outside of that you are against it. This isn't limited to the free market, it happens for free speech, drugs, freedom of association, taxes, war, environmentalism, etc etc.

      There are a small number of people out there who are actually committed to free market capitalism in principle. Not a single one of them would support government banning a free ma

      • Capitalism without regulation simply doesn't work. Adam Smith knew it, Milton Friedman knew it, every economist today knows it.

        There's a small number of people because Anarcho capitalism is a paper ideology that is pants on head silly outside thought experiments.

        Np such thing as a "free market", never has been.

        • I'm on the more "free" end of the scale, personally.

          Thing is, I'm for real world results, not ideology. So I mix and match on the basis of my knowledge for how things should work.

          And I run into the problem that no individual has time to do all the "due diligence" required in an utterly free market to make sure that they're buying what they're paying for in all the daily transactions, fully vetting all contracts, etc.

          So I prefer a sort of "standard contract" in the form of regulations that covers "most" tra

    • Why is issuing money pretty much a fundamental role of government.

      Money is a system, and comp sci people are good at figuring out what the essential mechanisms of systems are and how to code them up. For example, you can code up value-stabilizing monetary policy, democratic money-system-change-governance rules, etc. etc.
      Right now, we're only in the Cambrian Explosion (lots of rapid evolutionary exploration of alternative structures and mechanisms) phase of cryptocurrency and decentralized finance. So it is
      • Money is a system, and comp sci people are good at figuring out what the essential mechanisms of systems are and how to code them up. For example, you can code up value-stabilizing monetary policy, democratic money-system-change-governance rules, etc. etc.

        "A friend showed Pauli the paper of a young physicist which he suspected was not of great value but on which he wanted Pauli's views. Pauli remarked sadly, 'It is not even wrong'"

  • a perfect fit for George Santos and maybe Marjorie Taylor Greene and Jim Jordan. They just aren't approaching the right congresspeople.

    To be clear - there have been lying hucksters on the democratic side as well. Remember that democrat who tried to sell a senate seat? Or the one that was caught with a freezer stuffed full of cash?

    But, at the moment, the Republicans seem to have the lead on brazen, unapologetic falsehoods and corruption.
  • Clipper chip anyone?

    Biden has moved farther left since the 90s, which means he doesn't mind if people have personal cryptography anymore.

    But I'm surprised he hasnt been more aggressive to regulate cryptocurrency.

    • Crypto currency has nothing to do with the technology underpinning modern cryptography?

      Has AES or other known protocols been cracked? Did PGP go away? Has Biden taken an anti-cryptography stance? What are we talking about here besides you think left=bad?

      • by bugnuts ( 94678 )

        Crypto currency has nothing to do with the technology underpinning modern cryptography?

        Biden has a history of not wanting people to have the technology to make decisions that affect institutions, but trusts regulated businesses. And cryptographic hashes have everything to do with cryptocurrency. I made that distinction in my previous post, so not sure why you're confused about that. This history has shown in his ages-long voting record, but also most recently in this thread topic.

        Has AES or other known prot

  • by gweihir ( 88907 ) on Monday February 06, 2023 @12:20PM (#63269409)

    Custodia Bank did not get into the Federal Reserve System because they did not even begin to fulfill the requirements. That they "believed", they "did everything by the book" just means excessive arrogance and incompetence on the side of this "bank". Here is a hint for them: Just calling yourself a "bank" and being able to fill out an application is not enough.

  • There's so much money in crypto, those in charge in corrupt nations might ride it up, sell, hassle it back down, buy, make it easy again. Repeat.

    Pay attention to the funds of the politicians here, their spouses, their kids, their "blind trusts", etc.

    Of course, it wouldn't happen here. Nope. So don't bother.

  • by geekmux ( 1040042 ) on Monday February 06, 2023 @02:10PM (#63269775)

    FTX was not just the most fantastic collapse of yet another crypto laundering agency, but it was also THE laundering agency who was responsible for basically co-funding the political campaign in 2022 to decide how power and control may be maintained by one of the most powerful political parties on the planet.

    That same political party has now chosen to demonize those types of highly profitable and effective laundering operations to ensure that their political enemies would not be allowed to abuse the same against them in the future.

    Much like mass layoffs at liberal companies, crypto was never going to be a target in Government until after critical elections happened and voters were used for their votes.

  • If they did, they would know that cow shit is the latest hot commodity! Crypto was soooo 2021, manure is the new hotness now.

  • Can't be traced, tracked, taxed, or regulated... FOREVER: https://pirate.black/ [pirate.black] and https://atomicdex.io/ [atomicdex.io]
  • They went unregulated, from the showed everybody how responsible they were by burning people left and right. Some more power to the regulators because hopefully they can stop these Ponzi schemes. It's amazing to me that people are still calling for more Ponzi schemes. The other thing is in 20 years how many cryptocurrencies do you think are going to exist? There might be one or two not 2000, if there is any use at all. The fees on crypto or higher than moving regular cash.
  • They didn't care before because it didn't impact anything they care about. If a bunch of stupid people want to throw their money away and get fleeced who are they to stand in the way, not their problem.

    The FTX implosion showed two things however:
    1) That Crypto and normal markets are *currently* insulated enough that taking down the one won't impact the other.
    2) It highlighted this fact, but also showed some limited crossover (where legit normal market business invested heavily into Crypto), and just that gl

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