Crypto Surge Sparks Establishment Panic: Bans, Crackdowns, & Fatwas As Bitcoin "Undermines Governments, Destabilizes Economies"

Tyler Durden's picture

The last few months have seen increasing notice being paid to Bitcoin (and the broader cryptocurrency space) by those that control the status quo.

At first it was simple 'negative'-speak - "you'd be a fool to buy Bitcoin"-esque comments spewed forth from the truly ignorant or intentionally-ignorant (this group included bank CEOs, asset managers, payments systems, and remittance services) but to no avail, those fools saw the value of their bitcoins surge... Like the Winklevoss twins...

Then - as the price soared and the market cap of Bitcoin topped that of General Electric and Goldman sachs - the world's central bankers began to take notice... but in their standard manner, played down any risks, explaining that any systemic fragility "was contained" since cryptocurrencies were not big enough (this group included various Fed presidents, Bank of Canada, Bank of France, Bank of Japan, Bank of Korea, and so on all echoing similar phrases)... even though Bitcoin is now the 6th largest currency in circulation...

But this week has seen a new group of establishmentarians jump on to the offensive against anti-decentralization, de-control, pro-freedom cryptocurrencies - urging bans, crackdowns, fatwas, taxation, creating their own cryptocurrencies, demanding citizens sell, and outright confiscation (this group includes governments world wide and their mainstream media mouthpieces)...

India

India's finance minister, Arun Jaitley, has clarified that the government does not recognize bitcoin as legal tender. According to the Economic Times, when asked about the government's plans to regulate the cryptocurrency, Jaitley told reporters, "recommendations are being worked at." He continued:

"The government's position is clear, we don't recognize this as legal currency as of now."

 

Concerned over bitcoin's anonymity and its potential illicit uses, justices issued a notice to the central bank and other agencies asking them to answer a petition on the matter, reports indicated.

Turkey

Turkey has claimed Bitcoin is in fact “not compatible” with Islam due to its government being unable to control it.

In a statement from a meeting of the state Directorate of Religious Affairs (Diyanet), lawmakers said that Bitcoin’s “speculative” nature meant that buying and selling it was inappropriate for Muslims.

“Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation. They can be easily used in illegal activities like money laundering, and they are not under the state’s audit and surveillance,” Euronewstranslates the statement republished by local news outlet Enson Haber.

Diyanet added that the same principles of “unsuitability” in particular applied to Ethereum.

South Korea

Kim Dong-yeon, South Korea’s deputy prime minister and the minister of strategy and finance, revealed earlier this week that the government is investigating various methods to better regulate the local Bitcoin market and tax Bitcoin users accordingly.

While the South Korean government and its local financial authorities are actively discussing the possibility of enforcing a policy on Bitcoin taxation, at a press conference, Deputy Prime Minister Kim stated that the government does not intend to include any Bitcoin taxation policy in 2018’s amendment of the tax law.

Holland

A Dutch news paper urges its citizens to sell their bitcoins patriotically because cryptocurrencies can undermine government and destabilize the economy.

A bitcoin world can destabilize the real economy, a euro is also solidified trust.

First, the bitcoin undermines the government because a lot of transactions are about money laundering and tax avoidance. Another problem is that the profits of new bitcoins that come with it do not benefit the government (as with normal money creation), but are absorbed in heavily environmentally harmful computer power.

Central banks also have less influence on keeping the economy stable. In times of crisis, central banks can, through their influence on ordinary banks, ease credit conditions and encourage people to consume. The bank has no control over the bitcoin economy and an economic crisis can become deeper.

The investor has air in his hands when the bitcoin crashes, but also when the company turns out to produce baked air.

France

Putting money in an empty type of asset is “very, very worrying,” Robert Ophele, chairman of France’s market regulator. Bitcoin has no link to the real economy, Ophele says in a panel discussion at the Paris Europlace Financial Forum, warning that cryptocurrencies are a way to commit cybercrimes, allowing access to illicit goods and services.

If bitcoin was a currency, "it would be a bad one," Ophel exclaimed, as it poses major challenge for central banks and regulators.

UK

The Telegraph reported just around the time of the big drop, UK "ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax."

Taking a page out of the Chinese playbook, the UK Treasury has announced plans to regulate the Bitcoin that will force traders in so-called crypto-currencies to disclose their identities and report suspicious activity. 

According to the Telegraph, while "until now, anybody buying and selling Bitcoins and other  digital currencies have been able to do so anonymously, making it attractive to criminals and tax avoiders. But the Treasury has now said it intends to begin regulating the virtual currency, which has a total value of £145 billion, to bring it in line with rules on anti-money laundering and counter-terrorism financial legislation."

 
 

John Mann, a member of the Treasury select committee, said he expected to hold an inquiry into the need for better regulation of Bitcoin and other alternative currencies in the new year.

 

He said: "These new forms of exchange are expanding rapidly and we've got to make sure we don't get left behind - that's particularly important in terms of money-laundering, terrorism or pure theft.

 

"I'm not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn't have an inquiry next year. "It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we don't have a regulatory lag."

The proposed changes come amid increasing fears that Bitcoin is being used by gangs to launder the proceeds of crime while also attracting currency speculators - with the value of the coin soaring in the past 12 months.

In other words, the same reason why the IRS is cracking down on Coinbase clients in the US is also why UK and European regulators are joining China in cracking down on capital flight.

United States

The US Senate Judiciary Committee is currently tackling bill S.1241 that aims to criminalize the intentional concealment of ownership or control of a financial account. The bill also would amend the definition of ‘financial account’ and ‘financial institution’ to include digital currencies and digital exchanges, respectively. According to ranking committee member Senator Dianne Feinstein, the proposed bill is needed to modernize existing AML laws.

The bill would amend the definition of ‘financial institution,’ in Section 53412(a) of title 31, United States Code, to include:

“An issuer, redeemer, or cashier of prepaid access devices, digital currency, or any digital exchanger or tumbler of digital currency.”

If passed, the bill would likely have far-reaching effects for users of digital currencies both in the US and abroad.

Earlier reports also indicate that the White House is actively monitoring cryptocurrencies which could only mean more attempts to regulate the world’s first successful decentralized monetary system. With the growing involvement of Wall Street and the ever escalating media attention, it is not surprising that governments are stepping up their attempts to regulate digital currency.

image courtesy of CoinTelegraph

But as usual, any regulation-related-headline that the machines instantly sell, is bid back up, since it seems the algorithms have not figured out that there is no real way to 'stop' Bitcoin... which is exactly why the world's elite are so desparate.

Several industry commentators have issued their opinions on the various proposed laws. Tone Vays claimed that he expects a confrontation between the Bitcoin team, including the holders and users, and the US government.

“It’s bad... I think it’s gonna end in a very confrontational way between Bitcoin - even Bitcoin holders and users - and the US Government.”

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HRClinton's picture

Ling live CCs and the Parallel Economy !

Fork the (((bankster))) economy!

RAT005's picture

End of last week might have seemed volatile for PM but it barely put a little blip in the recent extended trend of very flat momentum.  Weird how cryptos are bouncing all over the place while gold/silver just coasted along quietly.

HRClinton's picture

I trade CC for equally decentralized assets: AU.

Neither is "money". So why would the Gov care about peeps going...

"Going Financial Gault" and leaving the Fiat Debt Plantation to be free? Don't they want us to be free? Or do only bankers and the MIC get to spread freedom?

MonetaryApostate's picture

Because they don't want their serfs trading /slaving for anything but their hyper printed fake money.

Look, a farmer one day decided to start an apple farm, soon other people wanted to work on his apple farm, & he paid them with apples, then the farm grew & the workers felt like they were getting cheated by working for something that grew off of trees, so the farmer, having a warehouse full of apples decided to fire all of his workers & hire new ones, of course the new workers were over joyed at having an opportunity to work, but after a while they began to see the futility of working for apples that they took from trees.

Stop & think about the story, replacing apples with money, but the farmer who controlled the farm got all of their labor at what real cost to him?

That's right, nothing, but the farmer is happy enough to charge you two bites out of your apple for the privledge of working on "His" farm. (Taxes.)

Now read this collection & you'll get it!

 https://plus.google.com/collection/QorNbB

(May need to open in a new tab)

tmosley's picture

Peanutz love Diane Feinstein now.

BennyBoy's picture

 

"Tulip Surge Sparks Establishment Panic: Bans, Crackdowns, & Fatwas As Bulbs "Undermines Governments, Destabilizes Economies"

SoilMyselfRotten's picture

Me thinks if they are truely panicking then they consider this  much more than a tulip mania

James TraffiCan't's picture

Thanks for sharing, I get it!

Pass the popcorn.

Beam me up!

NumberNone's picture

I have no dog in the fight but this will be deemed a ponzi. The announcement of the Winklevoss twins getting in early and becoming billionaires as a result was the first shot to illustrate this.

Blue Dog's picture

The prices of gold and silver are controlled by the paper market where they sell 100 or 200 shares of paper metal for every one that they have. This is done to prop up the dollar. If there was an honest market then metals prices would go up like Bitcoin and the dollar would tank.

LostandFound's picture

The centralised exchanges will be the first to get regulated, regulated to the point of exhaustion, the smart people will move into the decentralised exchanges to protect there identity and there assets. The governments will then chase the DEX and the innovators will come up with another system to move into. 

This will be fun watching the establishment chase for control.

 

Rhetorical's picture

Stage three.

Next uo co-option and Victory.  

 

No stops

VWAndy's picture

 Not if the pension funds get put into crypto. Then they will be forcing it on my dumb ass at gunpoint.

MonetaryApostate's picture

Those were put into the Bond Apocalypse.

HRH of Aquitaine 2.0's picture

Key words: a financial asset that cannot be controlled.

Exactly. That was the reason BTC was created. I love all the power-hungry freaks getting their panties in a wad because BTC is outside their control grid. GOOD.

It they are smart they will do what the states that have legalized pot have done: tax it and shut up.

Spanky's picture

You MIGHT be right...

But bitcoin is based on a NSA hash, one of their publically released cryptos. And, as far as I know, the NSA doesn't release anything they can't break.

Moreover, given bitcoin's "mysterious" early development and developer, Satashoi, I MIGHT have some serious doubts about its "security", at least as far as the NSA is concerned.

And I could be wrong, but the Russians and Chinese don't trust the security of any NSA developed crypto (public or otherwise)...

If this view is accurate, what we're seeing MIGHT be herding by the PTB -- as in "Hey look this is a good way to screw the Man..." when the Man is really the one behind the cryptocurrency curtain.

Just sayin'...

Cause I remember the last time a truly secure, independently and openly developed, crypto hash came out in the mid-1990s, back when email was just catching on. A bunch of .gov types got their panties in a wad over the original PGP (Pretty Good Privacy) hash... Did everything they could to make the developer's (Phil Zimmerman) life hell including export controls, "discouraging" its distribution domestically and "investigating" him personally.

After fighting them for several years, he finally caved to all the pressure (can't say that I blame him). And, not long afterward, a "new" company picked up development of PGP (without Phil) and released an "improved" version of PGP based on... you guessed it, an NSA hash. And there were no hassles by .gov types at all for this "improved" version.

So you might "trust" an NSA hash, but I have reservations. And in crypto, it's all about "trust" and "trusted relationships".

So, whom do you TRUST with your (crypto)currency?

HRH of Aquitaine 2.0's picture

Good points. Who do I trust? No one.

BTC / CC is one egg in my basket. If it is broken, oh well. I will not be crying as I have other eggs.

Including 100 pounds of .9999 bullion silver coins and bars. Did I ever say I had stopped buying silver? Or gold? No. I did not. Working on 200 pounds of physical silver. Hoping to buy again closer to $13 an ounce but if I can buy at $15 an ounce I will be happy.

Isn't that the goal? Buy low, sell high? I don't know any commodity cheaper than silver. Nor any that is more hated. That is a red flag for a bull that is paying attention. But too many people are not paying attention. Which is why the bull will gore them and leave them bloodied, in the end.

HRClinton's picture

You're beautiful, man. Consider this...

Given that PM peeps have been getting screwed by Wall Street and China for years with their price oppression of PM, cryptocurrencies finally  provide an opportunity to make a profit on their PM.

PM peeps are willing to sell for CC. Not  everyone, but enough  to create a market for an Exchange In Kind: decentralized asset for decentralized asset, i.e. PM for Crypto.

Eventually, as this market grows, supply/demand pressures will force the price of PM to rise in fiat units ($,€,¥...). The PM + CC dynamic duo will become an ever-increasing monetary force, as  productive capital looks for a new home  or a global harbor of safety in the CC/PM Continuum.

(As some of you may have read, I have already done this last week when I converted a number of my Bitcoin into 65 gold coins in Europe. --> Financial Gault.

runningman18's picture

What's hilarious is that some people think Bitcoin just "crept up" on the central banks and the international banksters, as if they were not aware of it from its very inception.  The banksters want a cashless world, that is one of their main goals, which is why they've been investing heavily in blockchain technology and crypto.  They aren't worried in the slightest.   

floosy's picture

It did. 

All the technologies existed (Strong hashing algorthim, distributed databases, linked lists yada yada yada.  They have all been around for years)  What no-one expected was the combination of them PLUS sufficiently powerful user level comupting equipment to allow joe average to perform the neccessary computations.

You can actually thank the NVIDIA/AMD graphics card wars for it since cheap, exceptionally fast (at solving mathematical hashing puzzles) hardware (eg modern gaming graphics cards) has enabled the distibuted ledger revolution at a user level.

Prior to around 2007 (ish) you would have needed multi-million dollar equipment sucking mega watts of power to acheive what today you can do with half a dozen $200 graphics cards attached to $40 CPU using 500 watts at the wall.

The fuckers never saw it coming I can assure you.

 

runningman18's picture

Then why are the banks so heavily invested in crypto?  And why are they using their media outlets to promote it all over the place?  The fuckers clearly saw it coming and are happy it did. 

Havoc Squad's picture

They are investing in crypto that they CAN control, like Ripple.  Not Bitcoin.

Spaced Out's picture

Bitcoin is completely open-source code. All you need to trust in is mathematics.

floosy's picture

SHA256 was invented by the NSA.  But as a software engineer with 30 years working in cryptography and since you are obviously not a geek let me help you here.

a HASH is not a cryptogram.  It cannot be reveresd or cracked.  A HASH is a one way operation. You cannot "unhash" a hash to get back the original data, not with a billion "quantum" computers.  All you can do is keep trying variations of data and hash them using the hashing algoritm and see if the resultant hash matches the hash you started with.  it's called "brute force" and is the only way.  

So how can it be cracked? It can't.  All they can do is build faster machines that can try more hashes of different data combinations per second to eventually get it to match the original hash.  Then you know that the original data was.

This is also how crypto "mining" works...by hashing the data until you get as special form of hash - it must have a certain number of leading zeros, which is difficult. Because it is difficult to acheive is THE VERY REASON it was used.

So who gives a shit if the NSA invented SHA256? Me and a million other nerds know how to implement it as well.  But none of us including the NSA can "crack" it because it is a mathematical impossibility to do so.

BoingBoing's picture

Your reply tells me you don't fully understand what hashing does in bitcoin.

SHA256 is used for mining. Even if the NSA can 'break' it, 'breaking' a hash function just means the ability to find a solution without exhausting the search space, or identifying collisions. Either of these would just mean the NSA can mine faster than others. Then after 2016 blocks the network would adjust its internal difficulty to compensate, and eliminate this advantage entirely.

The important part - signing - is done with bitcoin's own ECDSA curve, secp256k1, which is NOT an NSA standard curve

Other cryptographic primitives include the generation of public key addresses, which are derived from this same curve

So NSA curve or not, you have to crack the private keys to do anything harmful to bitcoin. And that's not coming until quantum computers...at which stage they just move to quantum resistant signature schemes.

swamp's picture

"Outside their corrupted control"

That is,
They can't steal it.

Byte Me's picture

Distraction...

tribune's picture

the only thing that is being distabiized is the establishments feelings of being in control. bitcoin is hard money, honest money. anyone with integrity and with the interests of societies well being will stand for honesty and integrity. bitcoin is 100% honest money. i stand for bitcoin

AUD's picture

God damn Winklevoss shit kids

xrxs's picture

Once you figure out who Satoshi is, you'll know where this is going.

RAT005's picture

Do you think it's a CIA type operation?  The connection to being a front to protect the rigged gold/silver market has me suspicious of this.

Plus if the gov. comes in with capital gains taxes on Crypto, think about how it is just a wealth transfer tax.  The govs. have been printing money like crazy for 10 years (plus the ~100 years before that...) and maybe the $200 billion BTC market is just a sponge to absorb some of the fiat printing, and then the gov. takes 30% of the profit back as taxes....  And the whole thing just cost a little electricity.

ukipboy's picture

One clue. He reads the London Times newspaper. The first block in the bitcoin blockchain (the genesis block) contains a verbatim quote from the London Times of January 3rd 2009. "Chancellor on brink of second bailout for banks". 

https://en.bitcoin.it/wiki/Genesis_block

Spaced Out's picture

Well that narrows it down considerably Sherlock!

HRH of Aquitaine 2.0's picture

Thank you! I was not aware of that. I love codes!

The FBI had a puzzle on their website a few years ago. It was a code in runes and backwards. I hadn't written in runes in 30 years but after digging out my copy of the Hobbit I had the code solved in a few hours. There was a point in time where I was fluent in Runes and used them daily for my journal. I was self taught. One of those children that had a lot of time, no supervision, and who loved books.

I think it is clear what is meant by including that headline. If you have half a brain and are paying attention. Sadly I know many people that are walking around as if they are hypnotized and that can barely speak let alone forumulate a coherent thought or independent opinion, if you ask them.

Very sad state of affairs. The first thing I notice about a person is their eyes. Is there a spark of intelligence? Few people have that spark into adulthood. It's rare. Add intelligence and a moral code of ethics and you end up with someone like me: an anomoly.

floosy's picture

The Geeks shall inherit the Earth.

The One...'s picture

Satoshi is not ahuman. Satoshi is an AI.

tmosley's picture

Only idiots still harp on that. Satoshi is long gone. Bitcoin Core is owned by Blockstream which is run by a company whose CEO is the chairman of the fucking Bilderberg group.

Happily, they have absolutely crippled the coin with their bankster schemes, which leaves better coins the opportunity to take over the top spot.

Exponere Mendaces's picture

You've gone over the Ver-event horizon, how sad.

Maybe you'll redeem yourself one day.

 

Bopper09's picture

'Putting money in empty types of assets'.  Oh, like your bonds?  Central bank funded stocks?  1.25 quadrillion worth of derivatives?  Fuck, I'll take my chances with some commodity backed cryptos.

Harry Lightning's picture

All of those assets you listed are backed by either the assets of a legal entty or the unlimited taxing power of a nation's government. 

What backs crypto ? The promise of an unregulated exchange that your crypto will be cashed in when you want to get out. 

There are no guarantors for the exchange, no way of truly knowing what their assets exist to back their promise of redemption. For example, if you buy crytocurrency on a crypto exchange, and the counter party to the trade (the seller) fails to deliver the agreed upon amount transacted, what does the exchange do to get you your purchased amount ? 

Think about days when stock markets have taken serious tumbles. If you had sold stock on those morning through a regulated exchange, the exchange guaranteed that you would ghet the entire sales proceeds of that transaction, even if the buyer of the stock you sold went belly up that day and had no more capital to pay for the stock they purchased from you, That's because the exchange has a huge amount of capital held in reserve in case trade participants fail to make good on their transactions. 

If you buy cryptocurrency and it proceeds to go up so high that the entity that said they would sell it to you reneges on your deal in favor of one at a much higher price, who is going to get you the crypto you bought ? Who in the trade has the capital to guarantee the proceeds of the transaction, to "clwar" the transaction through to settle ment ?

You may not think that this is important, but failed trades happen every day in all financial markets. Someone has to stand good for the proceeds of the trades, or the confidence that market participants have will soon evaporate, and with it the value of the instruments traded on that exchange. Market risk is a significant issue in large financial markets, and its one that the cryptocurrency market has paid little attention to, making cryptocurrency investment significantly more risky than transactions in other financial instruments. When combined with cryptocurrency's lack of any attachable asset, anything more than short term trading in crypto is a recipe for disaster. 

You know how the ball always finds the worst fielder on a baseball team no matter where the manager tries to hide that player ? The same thing happens in risk...markets have this terrible way of always finding and exploiting the most painful and expensive risks. And cryyptocurrency has a lot of risks. 

American History has seen this movie before. From the earliest days of the US through the 1800's, private banks existed in the country and its territories that issued private currency that each individual bank backed with its capital. Problem was that the bnks issued a lot more currency than they had capital, just lke today...its a fundamental staple of banking since profits are made by small differences between cost of borrowing and accrued interest from lending. 

When some event would spook the people into wanting their money out of the bank - some business would fail or the bank President died - the bank was unable to satisfy more than about 10-20% of the demands for the cash. Suddenly, the currency the bank issued would become worthless, as merchants stopped accepting the currency for fear that the bank issuer was in the throes of a lethal death spiral. The panic would spread from town to town, and all of the various currencies in an entire region would collapse, taking down the banks that issued those currencies and causing huge losses for people who had depositied money in those banks. 

To remedy this problem, which by 1892 had caused a nationwide economic depression, the US finally created a national bank in the form of a Federal Reserve, and began to regulate the nation's currency, getting rid of the private currencies that had caused so many problems as they started and then failed.

Cryptocurrency is more unstable than the privately issued bank currencies, because the percentage of capital that directly backed the private bank currencies was significantly greater in percentage measure than the capital backing any of the cryptocurrencies. Knowing this history, bank regulators as well as the US Comptroller of the Currency are now starting to look into the risks that cryptocurrencies pose to the national financial system. It won't be long before proposals to regulate these cryptocurrencies are put orward, and you can betg that once there is a major loss of money due to lack of capital in the exchanges, the proposals to regulate will be passed. At that point the experiment ends, and the price adjusts to reflect the actual capital that bacls this financial instrument.

 

Lore's picture

+1 Very good. The whole thing should have gone up in smoke when those ~4M bitcoins "disappeared," but one might as well try to reason with the people who line up for Black Monday.  Herds are not rational. 

Agstacker's picture

All I have to do is think of Mt Gox to keep me from investing in bitcoin.

matermaker's picture

WRONG.    All those are backed up by me giving you my tertiary wealth.    Food and shit.   I decide what I get paid in or you go hungry.

css1971's picture

Theres no fractional reserving on Bitcoin, at the Bitcoin level. There may be at the exchange level.

It's not a financial instrument.

And losses SHOULD be privatised.