Unnecessary Evil: How Government Regulations Kill Crypto Startups and Encourage Crime

Thanks to the EU’s most recent money laundering directive, a small business called Post-a-coin, which sold cute postcards pre-loaded with tiny amounts of bitcoin, is being forced to shut down. Meanwhile, the most heinous criminals in history are continuing to facilitate violence, trafficking and laundering of cash with impunity.

Also Read: Why the Counter Economy Is Necessary to Bitcoin’s Survival as a Disruptive Currency

Who’s the Real Criminal?

Pablo Escobar. El Chapo. ISIS. These are some of the infamous names that come to mind when people mention crimes like money laundering, terrorism, and drug trafficking. With such unethical actors in the world, it seems necessary to have regulations in place to stem the violence.

This is especially applicable to the crypto space, where transfer of funds can be easy, borderless and basically anonymous. Contrary to popular misconception, however, when it comes to lives lost or harmed, dollar signs, and promotion of scams, it’s actually governments, policymakers, and banks that are the biggest culprits. Small businesses and ethical actors suffer greatly under common false presumptions — especially the misguided belief that without centralized government regulation, crime cannot be stopped.

A deeper look into such infamous monsters as Escobar, and terrorist organizations like ISIS, reveals a shocking commonality: they always work by way of corruption within nation states and banking systems to achieve their unparalleled-in-scope criminal feats. According to Escobar, who himself was a politician for a short period, the business of trafficking is:

Simple – you bribe someone here, you bribe someone there, and you pay a friendly banker to help you bring the money back.

As for ISIS, a group needing to launder money for terrorist purposes, some of their most effective weaponry has been acquired as a result of quiet deals by big governments in support of opposition groups in Syria.

As Newsweek reported in 2018, “These sales were reportedly made possible through deals between Eastern European members of the EU, as well as the U.S. and Saudi Arabia, both of whom ‘supplied most of this material without authorization, apparently to Syrian opposition forces’ … Supplies of material into the Syrian conflict from foreign parties—notably the United States and Saudi Arabia—have indirectly allowed IS to obtain substantial quantities of anti-armor ammunition.”

Like the statist “war on drugs” demonstrably creates and sustains violent black markets, so the U.S. military industrial complex has created its own market, but this time, for terror. The Capones, Escobars, and El Chapos of the world are incentivized to participate in uber-lucrative illegal drug trades. The radicalized Muslim whose family has just been blown to bits by a U.S. drone is incentivized to acquire weapons. In both cases — drugs and weapons trafficking — the U.S. government has been happy to provide, on multiple occasions.

The Biggest Money Launderers of All Time

Measured in dollars, even big-time independent criminals can’t hold a candle to corrupt governments and the banks they support. Worse, these whitelisted bad actors are hardly held accountable for their crimes. Whether it’s 15,000 kilos of coke on a JP Morgan ship, Wachovia Bank scrubbing a dirty $380 billion clean for Mexican drug cartels, or the so-called “Troika Laundromat’s” multi-bank $8.8 billion dollar operation, state-connected financial institutions, corporations and lobbyists often get a mere slap on the wrist when busted, and can continue to do business with the respect of the public.

The above are just a tiny cross section of examples constituting a legalized black market whose scope is almost unfathomable for its breadth and depth. Taken all together, the aggregate crime facilitated by such official and well-respected institutions makes even Escobar’s massive empire look like little more than a Columbian ant hill. The $70 million per day, or about $25.5 billion per year, the Medellin cartel was said to be bringing in at the height of its operations, pales in comparison to a massive $2 trillion a year said to be laundered through traditional banking institutions. None of this is to mention the biggest financial criminals, terrorists, launderers, and counterfeiters of them all — governments themselves, and their central banks.

Counterfeiters Succeed, Crypto Small Businesses Are Destroyed

“Last summer I started a sideproject. Post-a-Coin,” writes Netherlands-based web developer Bèr Kessels in a recent blog post. “A simple and straightforward idea, really: you can buy high quality postcards with Bitcoin preloaded to give as a gift … I envisioned it as a small side-project: a tiny company that makes some revenue to keep itself running, but which, above all, helps to put bitcoin into more hands.”

Thanks to the effects of the EU’s fifth anti-money laundering directive (AMLD5), however, Kessels laments, ending with a sarcastic dig:

This autumn, I decided to stop rolling it out. To kill it off. The reason is the draconian Dutch implementation of the European AMLD5 directive, which is certainly going to solve the ‘rampant problem with money laundering with cryptocurrencies /s’.

Though the author reassures that they are not against laws and regulations designed to keep people safe and prevent theft, child trafficking, and financial crimes, they note that the implementation of AMLD5 by the Dutch government makes it impossible for a tiny crypto businesses to even operate.

Kessels, who doesn’t want to be a huge company, can’t afford the licensing fees, and doesn’t have anything close to a board of directors, is out of luck. “I really liked the idea of Post-a-Coin. But with such laws coming to place, the Dutch government forces me to close my company. Before I’m legally required to apply for registration at the Central Bank, I’ll close down the shop. Another startup killed by bureaucrats trying to control a niche with rules and laws.”

Kessels is far from alone. Popular U.K.-based crypto payments provider Bottle Pay had to board up its windows last month thanks to the new legislation, and mining pool Simplecoin, along with interactive crypto faucet Chopcoin, have both met similar fates in recent months. In sickening fashion, small, hardworking crypto startups are seeing their dreams crushed, while too-big-too-fail state policymakers and banks have a heyday siphoning value from the cryptoconomy via parasitic regulation. Even where small businesses wish to be compliant, they’re rendered unable to do, and then punished for it by being forced to close. While massive financial crimes, such as laundering and counterfeiting, are being committed every day by the state.

Fiat money such as the U.S. dollar is no longer backed by anything but a violent usage mandate. It’s printed freely, excessively, and irresponsibly by governments worldwide as global debt balloons to new all-time highs. The savings of the poor and rich alike are devalued while the state attempts to incapacitate the efficacy of sounder alternatives like bitcoin. It is not hyperbole to say that the biggest counterfeiters, money launderers, and violent criminals on the planet are the individuals called “the government.”

Decentralized Order

The above is where the conversation ends for most, and that is truly tragic. To imagine that financial order is not possible without a monolithic system of centralized violence (“stop your crypto business or armed agents will pay you a visit”) should be a definition of insanity. Instead, it’s become the dominant cultural hallucination. Arguments regarding the assumed horrors of the lack of a violent ruling class (anarchy) are easily refuted when viewed through a rational, economic, and ethical lens.

Defense against theft and violence is of course necessary, and can be done privately in decentralized fashion, as explained in one possible form by the video above. Order based on the universal, objective reality of individual self-ownership, functioning via decentralized social “nodes,” can calculate demands and needs of a society with much greater accuracy and efficiency than any monolithic system ever could. Similarly, the centralized financial authorities of today struggle — and with great cost to human life — to accurately and efficiently read economic signals thanks to their ridiculous size and out-of-touch, out-of-date protocols.

Every day, billions of people get along perfectly fine. There aren’t cops or compliance agencies on every corner, and the whole world hasn’t exploded yet. If anything, it’s our everyday lives where the most peace and rational order exists. It’s state-related affairs that are the bloodiest, most corrupt, and repulsively cruel. This seems highly unnecessary, to say the least. The arbitrary assignment of supposed greater rights to small groups of human beings called government is no different than saying one’s neighbor is “God” and has the magical right to shut down someone’s yard sale by wielding an axe.

What are your thoughts on the state’s moves to regulate crypto startups? Let us know in the comments section below.

Op-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

Images courtesy of Shutterstock, fair use.

Want to create your own secure cold storage paper wallet? Check our tools section. You can also enjoy the easiest way to buy Bitcoin online with us. Download your free Bitcoin wallet and head to our Purchase Bitcoin page where you can buy BCH and BTC securely.

The post Unnecessary Evil: How Government Regulations Kill Crypto Startups and Encourage Crime appeared first on Bitcoin News.