Over at the FTC there is an RFC. (Sounds like the beginning of an Eminem rap song doesn’t it?) The short of what they are asking for input concerning is crypto regulation to catch criminals at a technological (banking) level. Weirdly, the very thing the RFC uses and asks for (that is to say anonymity) is precisely what is seeking to be removed when it comes to banking transactions that utilize crypto. Highly annoyingly, my comment was too long for the standard window, and required my attached comment to be in Microsoft Word format. Have we learned nothing from the past 25 years? I am inclined to think not–especially with the questions being asked in this RFC.
I am going to reproduce my reply here, even though it de-anonymizes me, for whatever that is worth. My idea in doing this is two-fold—it gets more attention along with more potential comments on this RFC and it allows people who might not want to put their input on the RFC to have the discussion somewhere else since I will be re-posting this post in other channels where discussion is more likely than my mostly isolated blog (cue appropriate sad country song about losing your dog, and house, and truck. I won’t require your reply to be in Microsoft Office format either)
Back in the Revolutionary War days this is the kind of discussion that might have happened in a pub. The anonymous part only played into matters when it was time for a tea party. In some ways, having to be anonymous to have a discussion at the request of the government is more a symptom of the problem than the solution. Potential recrimination is probably the reason for the precaution, or perhaps it acts like a hedge against liability. (for the government? The people?) Either way, if anonymity is the new pub, it makes even less sense to mess with it at the banking/crypto level. My more involved reply follows:
Blockchain technology offers addresses which are present on the blockchain. These addresses are the identity of the person or entity utilizing the blockchain. The precedent for understanding this system can be found in the US mailing system. Many pieces of mail arrive that have no specific identity associated with their delivery but only an address. If one needs to know who has received a given piece of mail, one would need a search warrant to find such an item in the place where a person resides. This then is the evidence that the person has received the piece of mail with no specific name associated with it. The address on it becomes entangled with the identity of the person at the location.
The blockchain contains all transactions associated with a given address. If one has a warrant and finds a hard drive that contains an address, then one can see all the transactions made to and from that address. The supposition of a criminal act supersedes utilizing the power to investigate what might be fraudulent. Monitoring at the banking level without a warrant or due judicial process—or for that matter at the level of the mail—creates a situation whereby the executive, legislative, and judicial powers are unbalanced. The banks or things defined to be banks become responsible, in part, for being police. This goes against the free market idea of those like Adam Smith since what might be an illegal transaction, can, as has been seen in the past five years, change drastically depending on what administration happens to occupy the Oval Office.
Using AI for this process is even more reckless as AI has been known to “hallucinate” and creating a digital ID system might be used to detect crime but can just as easily be used to create a surveillance state where it is illegal to be Mormon or Catholic. Likewise, relying on APIs places one in potential cooperation with Big Tech, which again, has been shown to be a serious problem. Technology for elections has shown that it cannot be trusted. While one can argue that it can be made secure, the fact is, it is easily made insecure and identity—that is to say people being who they say the are—can always be faked. It is a question of money and time.
On the other hand, crimes that are being committed is clear-cut. If someone is selling a kilo of cocaine, odds are they are also laundering money. If someone is a Christian, however, and they have been de-banked, odds are they might have some behaviors that also look like money laundering. Instead of coming after the anonymous side of cryptocurrency and trying to regulate or catch crimes at the transaction level, it seems to me it would be more expedient to catch actual criminals committing crimes, and then issue the standard warrants through due process. If one finds a Bitcoin address in the subsequent evidence, then one has all they need to trace where the money has been going. Whether or not things like AI should be used for catching crimes at an investigation level in coordination with police or federal bureaus is another discussion, but this question is asking for advice on something that really should not be done from a Constitutional standpoint since anonymity is not used only for committing crimes. This Request For Comments (RFC) is such a case where anonymity is utilized to have a discussion about the issues presented here. Should it also require a digital ID so we can begin to analyze language and word choice to stop criminals who respond to RFCs? The answer should be a clear “no”. Without the prior warrants and supposition of criminal intent, we wind up with more surveillance in a place it ought not to be since such a solution treats everyone as potentially guilty until proven otherwise by the AI algorithms or API inferences. Likewise, such monitoring would produce meta data about people, which all institutions have proven unable to handle or to be capable of being entrusted therewith.
In short, I am surprised the Trump administration is asking for comments on this topic after it has seen and experienced firsthand all the evils being outlined here. What is different this time that ensures that the kind of actions presented as options in this RFC will not be used against future political candidates like Trump? Might a political campaign contribution be flagged as illegal? Might one be hallucinated? Might some API from a given company be infiltrated by Chinese globalists? I fail to see how any of the questions asking about this specific solution prevent any of these events from occurring. What is obvious, however, is that unbalancing the executive and judicial along with the legislative is not going to bring about a better world with regards to reducing crime. It just sets up the next guy with a grudge to have better tools to screw over people that he or she happens not to like and for the common citizen to have little say in the matter. After all, everyone has to have a bank unless they want to stuff all their money in a mattress or coffee can.
It is my opinion that all these points are so prima facie obvious that to link to sources that confirm their self-evident truth would be an absurdity bordering on mockery. The only question one has to ask is whether one has been alive in the past ten years, and if they have been paying attention. Criminals find ways to commit crimes. Banks are not the place to police criminals as a primary aim. Neither is crypto a place for that. If anyone thinks otherwise, then we should fire all police officers and hire many more bankers or create many more coin exchanges and blockchains and drop the idea that the police can do any meaningful investigative work. That is, after all, what this RFC is indicating—unless I am missing something that “We The People” are not being told.
I guess you could say, then, that this is an RFC to the RFC for the people that want to have a more free-form discussion without all the requirements of the initial RFC. We are two tiers down in the dream now. Gonna take two kicks to wake us up, as per Inception rules.