More than a decade ago, regulators nearly suffocated PayPal. Now it looks like they’re trying to squelch another disruptive, innovative payments system. At least three exchanges in the U.S. that traded the digital currency Bitcoin have shut down, apparently as a result of guidance issued last month by the Financial Crimes Enforcement Network. That agency has emerged as the top threat, at least in in the United States, to the decentralized Bitcoin network—more so than the widely reported price volatility and hacker attacks.
Matonis does not include the most telling parts of the Bradley Jensen interview (my transcript). Around 17:30:
Jensen: “I have heard through the grapevine that FinCEN has prosecutions in the works for Bitcoin broadly speaking. My guess, based on the timing of the guidance, and what I had heard previously from the rumor mill about the prosecutions, is that FinCEN put out the guidance sort of ex post facto to justify the prosecutions that they’re about to launch.”
Interviewer: “So you expect this to happen within in the next couple of months…”
Jensen: “Again, I’ve heard different rumors, it’s difficult to predict, but yeah. We knew that the prosecutions were in the works, and then later the guidance came out, it seems like a sort of CYA approach to how they’re doing it.”
Jensen: “We knew that these guidelines and these prosecutions were in the works, even last Congress. Ron Paul was the chairman of the House subcommittee that had jurisdiction over FinCEN, and he never had a single hearing on this. Congress has dropped the ball.”
Interviewer: “Why is that, do you think?”
Jensen: “For a lot of people these are relatively obscure questions… I mean, Congress is a representative body that works to meet the demands of their constituents. Their constituents are demanding a balanced budget or gun control or immigration reform or something else… those are the issues that you deal with.”
Jensen, like Foseti, has lived in and knows tha USG—the real one, not the one you see on TV:
What is the purpose of an alternative currency?
Let me answer that by analogy. What is the purpose of the internet?
If you’re reading this, you use the internet to read the often unorganized thoughts of a person with strange views on all kinds of subjects. Undoubtedly, facilitating such reading is one function of the internet. In reality, however, the internet is just a way for people to watch porn.
Similarly, an alternative currency might be a cool way to create a better store-of-value—one that’s free from manipulation of central bankers and large banks. In reality, however, it’s just a way for people to break laws governing financial transactions.
It’s kind of a problem that (most of) Silicon Valley thinks it’s governed by the TV Washington. SV is a very confident place. Very confident people have a way of thinking a new reality into existence. Reality itself changes to conform to their confidence. Sometimes this actually works. Other times…