Sometimes, living in the Bitcoin bubble, I forget how there are still large segments of the population that believe governments should be able to control where you go and how you use your money.
This story in The Economist uses a British law enforcement operation involving a Russian influencer, British drug gangs, sanctioned oligarchs, and Irish crime families -- all the most exciting things -- to explain why money without middlemen is actually really, really bad.
This sounds good, until you think about what those “intermediaries” actually do. Bankers, lawyers, accountants and others involved in the conventional financial system are under onerous government restrictions to keep criminals and terrorists out of it. They are obliged to report suspicious transactions to the authorities and fined heavily if they don’t. The global finance industry now spends more than $200bn a year complying with the laws that have been put in place over the last five decades to stop money-laundering and financial crime. Banks report tens of millions of transactions to their in-house financial-intelligence units and block many of them while they’re being checked.
Yes, the purpose of intermediaries is to rat on you. There is a $200 billion tax added to financial services for the purpose of stopping "bad people" from using money. While this may be convenient for governments, I don't know that it benefits any of us that much. This argument could be used for any technology: the internet, cars, books, language.
You can use it as you would a dollar, but without any of the checks and scrutiny that come from moving actual dollars around. It is the financial equivalent of being able to turn up at the airport, open a secret door and go straight on to the plane, without any X-rays, passport inspections, customs controls or intrusive questions.
Additionally, the author is very optimistic about the effectiveness of traditional law enforcement:
If Zhdanova had tried to move that much in banknotes, the consignments would almost certainly have been intercepted at borders. If she had tried to use the traditional financial system, banks would have noticed she was dodging sanctions and frozen the transfer. Converting the cash into a cryptocurrency such as bitcoin would have helped her evade these checks, but it was an expensive and unreliable option.
Apparently, people never successfully move large amounts of money via the traditional banking system or across borders without government approval.
It ends with this banger:
Tether’s efficiency makes money-laundering so easy anyone can do it.
Either way they won’t affect Tether much since it is not based in the United States. In January the company moved its headquarters from the British Virgin Islands to El Salvador – Ardoino said that the government of Nayib Bukele shared his vision of financial freedom.