This is an opinion editorial by Beautyon, the CEO of Azteco.
In this post, I parse the above-named act, pointing out the glaring flaws and errors in it. It should be clear to any American that this bill is an abomination and that it should not pass into law. If it does, it will be challenged in the Supreme Court, struck down, removed with prejudice and the scathing chastisement it deserves.
The idea that there can be “responsible innovation” is absurd on its face. If Senators Cynthia Lummis and Kirsten Gillibrand were alive during the era of lake ice delivery by horse and cart, they would have found that the electric ice box was “irresponsible innovation” because many men would be put out of work and horses turned into glue or meat.
That is exactly what is happening with Bitcoin. This new innovation, which allows everyone to have the powers of a bank in their pocket or their business, puts pre-Bitcoin banks and their ignorant regulators out of business forever. This is “irresponsible” according to Lummis and Gillibrand, who want to preserve the broken and corrupt system and put a lick of orange paint on it to give it a modern look. This is the true meaning and effect of them tacking on and spraying the imaginary, concocted phrase “digital assets” throughout old regulations as is suggested in this bill. It’s blockchain fairy dust and it will not wash off.
Lummis and Gillibrand, with this scandalous, scabrously proposed bill, are going to cause American entrepreneurs (that have passports and know how to use a map) to opt out of their crony capitalist, anti-American sandbox for the free market — which is rapidly settling on bitcoin as the new global reserve currency in over 45 different countries. They can incorporate anywhere and their computers and staff don’t have to be in any particular place at all. No one has to or will choose to put up with this, unless they want to.
Here we go …
In the definitions section is the evil seed and root of the problem that started this absurd and deeply offensive nonsense. There is no such thing as a “Digital Asset.” That is an analogy used to contextualize bitcoin for computer illiterates, and not a real thing at all.
Many tools in software can be used to confer economic, proprietary (closed source) or access rights or powers. PGP/GPG (Pretty Good Privacy/GNU Privacy Guard) does this, and is not considered an asset, but under this definition, it can be classed as such — as can a plaintext username and password — because both of these things and many others confer access rights or powers. In the case of public-key encryption, access to plaintext and the power to decrypt.
Usernames and passwords are cryptographically secured when they are stored in databases, so they are captured by this definition also. This bad logic and computer illiteracy is what powered the insane non-fungible token (NFT) craze. It is obvious that the people who wrote this bill are totally ignorant when it comes to how computers and software works; otherwise they would have been more precise in their language to capture exactly what Bitcoin does, but of course if they did that, they could not have drafted this daft legislation at all. Lying is an absolute prerequisite here.
Similarly, the line, “any similar analogue” captures literally anything that can record data in an ordered manner, like an abacus or score in a video game. They probably thought they were being funny when they used the word “analogue” here. It’s not funny at all.
“Virtual currency” is a vague term that can mean literally any number on a screen where the viewer is led to believe he is looking at a balance that is allocated to him. That means any score in a video game, like “Super Mario Land 2: 6 Golden Coins,” where you literally collect coins.
Now, an unintelligent person would say that because that Game Boy game is not networked and the coins are not transferable, it is not “crypto” or “virtual currency,” but what they don’t understand is that the cartridge itself is the “digital wallet” which can be handed over for cash at any time, and the Game Boy device is the wallet viewer that anyone can use to confirm how many of the six golden coins are in the game.
If you don’t know anything about video games, have never played Super Mario Land, don’t know what cartridges are or how scores are kept in games, you should not be drafting legislation that touches bitcoin.
Stablecoins are of no interest and should not be conflated with bitcoin. That they are bundling all of these different tools and services into one piece of legislation further displays their total ignorance. Stablecoins are nothing more than contracts that don’t rely on mythical “blockchain technology,” but on the soundness of the companies issuing them and making the promises that their offering is backed, for which no new legislation is required.
If a company fraudulently claims that its proprietary database has one dollar per entry held in trust and that turns out not to be true, the directors have lied and committed fraud. No new law is required to cover that circumstance simply because they’re using a novel database and sales language to perpetrate the fraud.
“Other securities and commodities,” which ones?
Anyone writing video games could be forced to register because they’re keeping score in a game with a database and would be captured by this legislation. It is insane.
This definition makes it clear that the authors are computer illiterate, and that they do not understand how anything works in the 21st century. Every database on Earth that has replication, MySQL-NDB or other such capabilities is captured by this. What does “participate” mean here? How much of the database is “partial” enough to trigger this definition to return “true?” All databases in multiple nodes are synchronized by default. How can they not know this? How is it that they have no one on their staff who knows, or who knows which person or what question to ask?
Data is always appended to databases following consensus rules of the database engine. By this definition, Wikipedia falls under this because it has all the attributes of “distributed ledger technology.” Wikipedia,
- Is shared across a set of distributed nodes that participate in a network and store a complete or partial replica of the database.
- Is synchronized between the nodes.
- Has data appended to it by following the specified consensus mechanism of the Wikipedia moderators.
- May be accessible to anyone or restricted to a subset of participants.
- May require participants to have authorization to perform certain actions or require no authorization.
By the definition in this shabby, ridiculous and shameful bill, Wikipedia is a “distributed ledger technology” and is fully captured by the law, so it will be compelled to register with the Securities and Exchange Commission (SEC) or some other incompetent authority. If not, then why not? There is no “carve-out” that is possible here either, because the entire world’s biggest services (and small ones) all run on top of the principles Lummis and Gillibrand are trying to carve out for themselves and their anti-American cronies.
The term “digital asset intermediary” captures anyone who provides database services or collects information to be added to a database via a proprietary interface. “Digital asset activities” literally means rolling dice. Do you think I’m being absurd by saying this? I’m very serious.
All of these would be considered “digital asset activities,” meaning that the manufacturers of the tools that facilitate the activities would fall under this legislation … and then what? Are they going to license the possession of dice? Sounds ridiculous, doesn’t it, but it is no more ridiculous than this absurd piece of draft legislation. It is ridiculous to claim that a mathematical operation done with dice is materially different to one done in a computer. By this logic, the First Amendment is constrained only to text written by hand, but not by a typewriter or on a computer.
The device you use to write with is immaterial, inconsequential and totally separate to your fundamental right to write and publish.
No American lawmaker should be unaware of this. Also, there is no exception in the First Amendment for writing that is math. Math is protected speech according to the First Amendment.
This ridiculous passage applies to Folding at Home, the distributed protein-folding project, BitTorrent and any tool where more than one computer is connected to another that splits the work or monitor system state. “Any similar analogue” means that Folding at Home is captured — heaven help them if they offer a financial reward to whoever finds the solution to a protein-folding problem because it could be seen as a “block reward” for finding the solution to a hard biology problem — which is exactly what bitcoin miners do!
When a Folding at Home participant finds a solution, that solution is sent to Folding at Home headquarters, where it has a monetary value to pharmaceutical companies. They are taking control of a unique “digital asset” that was mined and then transferred to them. All participants in Folding at Home and the discovery of solutions to the folding problem are captured by this law.
And now … Here it comes …
There is no such thing as a “digital asset,” therefore the rest of this section falls. They’re building a tower of lies, layering lie upon lie upon lie. Why is a balance on a banking app not a “digital asset?” If you have the Chase Bank iPhone app, you can send money instantly to other Chase app users in the same way that you can send Lightning payments to anyone using a Lightning app. Chase uses distributed ledger technology underpinned by the COBOL programming language, so they’re 100% captured by this legislation. If not, why not?
The digital assets in a Chase app are not legal tender; it is “a digital representation of legal tender.” It is not backed by anything; Chase promises to pay legal tender to the sum shown in your Chase app; it is a form of contractual promise only, and not money. Chase certainly makes a statement in the form of a promise to pay U.S. dollars on demand to the account holder, and there is a hard peg of 1:1 for every digitally represented dollar in your Chase app. For all intents and purposes, and as defined in this draft legislation, the Chase banking app is a stablecoin app.
Does it immediately follow that Chase is now under these absurd and irrational “cryptocurrency” rules, or is there a carve-out exemption for the crony capitalists and vested interests set to be obliterated by the Bitcoin ecosystem?
“Used primarily as a medium of exchange.” This is, of course, totally absurd. The writers of software can have no knowledge of how a tool is used in the future, and burdening companies with rules borne of assumptions like this is irrational. What if the minority uses it to simply count anything, like how numbers are normally used? Should the fact that they are counting on a “blockchain” expose them to regulation? Why is counting money a regulatable act whereas counting a herd of ostriches is not? Or are ostriches not money? There are people who think that anything can be money, so in the confused minds of the people who think bitcoin is money, ostriches can be money too and should, quite naturally, be regulated.
Ostrich breeders are not really “breeders”; they’re ostrich miners. Ostrich sellers are not selling huge birds, they’re money transmitters. They are these things because I am a senator and I say so. This is exactly the type of logic that you’re seeing in this ill-advised bill.
This section specifies that it must not be legal tender. But bitcoin is legal tender in El Salvador, so therefore it is totally exempt from this bill, correct? If not, why not? If you’re going to say that the laws and definitions used in El Salvador have no force in the USA, then the opposite is also true and U.S. law cannot infect other countries. I think most non-U.S. citizens would be happy with that arrangement. Keep your odd, parochial ideas locked inside U.S. borders while we forge ahead into the future.
Bitcoin is a database administered by tens of thousands of people and incorporations all over the world. The Commodity Futures Trading Commission (CFTC) cannot be granted jurisdiction by fiat over foreigners and the software they’re running on their machines. This land grab, this power grab, will be rejected by all non-U.S. persons, sovereign nations and the foreign corporations wherever they are incorporated. The U.S. legislature cannot seize the intellectual property of foreigners or demand anything of any kind from them. This is hubris and ugly American chest-beating of the kind that has made America into a hated nation around the globe.
This section is interesting, because it shows how the State is scrambling to keep up with the myriad ways software developers come up with new market ideas. The very silly “digital collectible” or “NFT” fad is what is being obliquely referenced in line 26. By the time this bad legislation is rejected by both houses or is challenged by SCOTUS and purged, the NFT fad — like the ICO fad before it — will be dead and forgotten for some other shiny new distraction, and this language is totally irrelevant. “Hey Kidz. I see wut ur doin and ima legulize dat 4U.”
In this section, the legislators are carving out a legal requirement to use a licensed or chartered or registered entity subject to the rules they’ve already laid out for entities in the legacy system, in an attempt to open the door for those legacy entities to find a place in the new ecosystem, guaranteed by legislation. It is very unlikely and onerous if attempted, for any new incorporation to pass muster and act as a peer to deliver the service of holding “digital assets” (which don’t exist at all), and so the legacy incumbents are in a perfect position to continue to dominate with the blessings of the State.
Obviously, anyone in any jurisdiction other than the USA can ignore all of this and build a world-changing challenger company that can dominate globally. And they’re going to do it. This legislation can’t protect the legacy system from competition, as is its intention.
As for the line,
“(v) An appropriate foreign governmental authority in the home country of the custodian.”
U.S. law can’t determine what is and is not “appropriate” for foreigners to do, or the standards they should adhere to, if any. Who do these people think they are? Many awake Americans have the means and knowledge to use the great advantages that foreign jurisdictions bring to the market. They are not going to be dissuaded, corralled, coerced or shamed into capitulating to this anti-American drivel, should it even become law.
Also, the cancerous tentacles it inserts into other legislation over its 60-plus pages represents a maze of pure filth that will be very difficult to untangle should anyone try to salvage this unspeakable garbage. Even if they do, it is an absolute certainty that the interns tasked with doing it will be Ivy League computer illiterates with the worst human characteristics and tendencies, i.e., crony capitalism, hubris, superiority complex, sociopathy, socialism, etc., and will be diametrically opposed to Bitcoin and everything to do with it out of the gates.
Bitcoin is permissionless, and companies that work with it should not require advance permission to use that database for any purpose. Since it is a (soon to be acknowledged as) First Amendment Protected Activity (FAPA), this will be struck down as prior restraint. The U.S. government cannot stop a person from publishing anything in advance because they simply believe it may cause harm. This all goes back to what Bitcoin actually is and how it works.
People making Bitcoin transactions are publishing text to a public database that anyone can read, even machines. As you’ve seen above, all the operations required to use Bitcoin can be done manually. They are done by machines for convenience and speed, but the acts being done are without question acts protected by the First Amendment.
Whether or not some computer illiterate understands this is irrelevant. The SCOTUS will be made to understand it and they will strike this bill down with furious anger, should the majority of Congress be corrupt enough to vote it into law.
It is absurd that this section is inserted. They’re saying that it is unlawful unless the customer waives his protections (nota bene: “protection” not “right”) with the CFTC. It should not be a requirement that a consumer needs to do this. By dint of going into contract with the company they’re getting service from, they can waive their mafia “protection” upon signature. Why do these people believe that individuals should write letters that will never be read or relied upon to them? Who do they think they are that they believe they can put onerous and obnoxious burdens on anyone? Why are the contracts that people voluntarily engage in sufficient in other areas to waive all sorts of other “rights” but are insufficient in this particular matter, requiring that an additional supplementary letter must be sent? This is entirely illogical and an artificial burden on consumers that serves no purpose and protects no one.
If the acts they’re trying to prevent are really worth preventing, surely they should not allow them at all, and not allow people to put themselves at risk, if it really is the task of the CFTC to keep people safe from themselves. Why not, then, allow people to opt out of all CFTC rules entirely, by simply writing a letter proclaiming:
“I want none of your protections nor anything to do with you. I waive all protections afforded and offered by CFTC in perpetuity.”
Once again, there is no such thing as a “digital asset.” Keeping this in mind, why is it that the Hollywood Stock Exchange (HSX), created by the genius Max Keiser, was not deemed to be under CFTC/SEC jurisdiction? No one has an answer for this. Those that have considered these matters who are determined to etch their names in the legislative rolls are not concerned. All they desire is to be famous, and to have their names immortalized in a bill.
HSX is called, “a game” but why is it a game? Why aren’t bitcoin exchanges considered “games?” They are indistinguishable from HSX. Is it the case that if any bitcoin exchange called itself a game that none of these crazy new rules would apply? No one can answer this, obviously, and this is the crux of the problem.
If the HSX decided to swap out its MySQL database and use Solana or Bitcoin, would the function of HSX suddenly change? Of course, it would not, but saying this exposes the entire thought process of this bill for the nonsense that it is, and this perfectly sound, irrefutable argument will be used in the SCOTUS case to destroy the possibility all new Bitcoin regulation in the USA, and force the removal of existing regulation.
People with limited intellectual resources will prattle off “blockchain speak” to describe why MySQL isn’t the same as Bitcoin, but they are only able to think in analogies that have been spoon-fed to them, and can’t deal with reality and facts. Even when you demonstrate how their thinking is totally wrong, they refuse to accept it because they’re members of what is effectively a brainwashing cult, with the added incentive of financial investment and greed up to the neck, to keep them fully enslaved and in thrall to the blockchain cult narratives, speech patterns and blathering.
In the drafting of this daft nonsense, the drafters subconsciously know that what they’re doing is 100% wrong. This is why in this section, it says:
“IN GENERAL. — Any trading facility that offers or seeks to offer a market in digital assets may register with the Commission as a digital asset exchange…”
They may register or they may not register. It doesn’t say they must register. Why not? Under what exact circumstances is a service to be exempted from registration? Obviously, the Hollywood Stock Exchange is not a “real” stock exchange because everything in it is made up, but so is everything on any “crypto exchange” where people have simply decided that they want to play that game and take the consequences. No, just because people pay for a game service doesn’t mean it is “financial activity” analogous to real stock exchanges, genius.
The reason why these misguided and dangerous people can’t say with absolute certainty which agency or rule applies to databases is that they have no understanding of how anything works or what anything really is. They are victims of their own lies, narratives and concoctions. This is why they’re equivocal, uncertain and leaving it up to the applicants, using gestures, rules of thumb, analogies and false definitions to circumscribe a fake territory for themselves to rule over.
If no one chooses to register with the CFTC because the context is a paid-for game in their terms of service, under what pretext is the CFTC authorized to act? There is no legal restriction on the use of financial terms in any game, so entrepreneurs are free to make 1:1 copies of any financial system service, exchange or trading desk. Like the Hollywood Stock Exchange, with all of its related terms, graphs, tools and ephemera, in a perfect simulation that is not real, they have the absolute right to charge for access to their game on whatever terms the players will accept. And no, putting an upper cap on how much people can charge for a service is not an option. And no, gambling laws would not capture these sites recontextualized as games because they don’t quote odds and will explicitly disclaim that gambling is the activity in which users are engaging.
This is the true nature of what is going on with fictitious “digital assets” and the entire field that the power-mad fame-seekers have been gulled into believing was real. Now requiring “rules of the road” concocted by them and their misguided band of anonymous crony capitalists, ignorant interns and anti-American suicide squad saboteurs.
By this section, Ethereum and all altcoins the drafters mistakenly considered to be “digital assets” cannot be traded on the basis of this new law. All altcoins in proof-of-stake systems or with super-node controllers or any system with a central company that can change rules, stop a system entirely or do anything unilaterally, cannot be used under this proposed law.
Manipulation is undefined here; who is to say moving from proof-of-work mining to proof-of-stake consensus is not manipulation? Proof-of-stake immediately puts those with stake above those with no stake, creating a multi-tiered and provably unfair system. It is also arguably a breach of promise, depending on the terms and conditions of the “blockchain” making the changes.
You all know that “Faketoshi” is trying to reverse ancient transactions to have money allocated to himself. Were he to succeed in doing this, bitcoin and all its derivatives would be captured by this crazy rule. And of course, super-node gatekeeper controllers fulfill the criteria of “…functionality or operation of the digital asset can be materially altered by any person or group of persons under common control.”
Since so many “coins” fall afoul of this, it is obvious that game sites that mimic commodity and stock exchanges using them should not and cannot fall under CFTC remit, but instead are just game points on a new database. They all escape these irrational rules if the rules become law. Otherwise, all game point systems fall under the rules and must be stopped.
The networks that mediate the databases used in what these ill-informed characters call “digital assets” all rely upon and are built on other people using the work put into managing the network to preserve network integrity and keep the network running and viable. To say that these businesses cannot use the tool they are using (use of which is required to keep the tool viable) is irrational and illogical. The most simple example of this is “mining fees” which must be paid to make transactions on the network, or in proof-of-stake, using the fact that stake is held that may be allocated to customers as part of the proof.
Once again, they are saying that any customer who agrees to be exempted from these rules may be exempted through a waiver … so then, why stipulate the rule in the first place? All the business has to do is make the waiver part of the terms and conditions and then the rule is instantly nullified by default.
What they’re saying here is that companies are to be compelled to publish proprietary market data that may advantage their foreign competitors. Efficient market mechanisms emerge from the market, not by command of the State, which is a first-class blundering, stumbling, incompetent meddler.
Similarly, you can’t compel people to enforce a nebulous idea of “rules” that are not explicitly codified. Also, “protect” doesn’t mean anything in this context either; protect who from what, exactly? And what does “abusive” mean? Making excessive profit, no doubt; many of the people behind this bill are socialists in all but name. “Fair” doesn’t mean anything either.
The rest of this section is full of twaddle. All betraying the absurd idea that these new exchange services are analogues of the existing stock and commodities markets, and that similar rules should be applied to these nascent markets, unchanged without any new assumptions, correct assumptions, new thinking or any thinking at all. The requirement to have a back door open to the CFTC however is galling and insulting, and enshrines privacy violation. Absolutely horrible and utterly anti-American.
Once again, only a maniacal despot would demand this intrusion, disruption, violation and invasion of private businesses by the CFTC (or any other agency), and the power to liquidate positions at the CFTC’s command or even suspend service at their orders. Of course, should this insulting drivel be passed into law, the spur will have been heeled into the side of the donkey to produce more exchanges like Bisq that the CFTC can’t touch.
Why? Why should anyone be compelled to divulge proprietary business information to the CFTC? If no breach of contract or lawsuit is underway, and no criminal act is accused and no warrants issued, why should evidence be forced out of anyone? That isn’t how America works. Before you can be compelled to divulge information a warrant must be issued. That’s the Fourth Amendment to the U.S. Constitution, geniuses. Did you know that? How can legislators not know this?
As for making trading volume public, that’s proprietary information. Price information is already published so that the market can work, genius. Why doesn’t the CFTC collect this information itself on its own equipment? Because they’re incompetent, that’s why. What is “other trading data?” If you don’t specify, anyone who is sane won’t provide anything not explicitly requested. That should be the default, should this vile and evil law be passed.
First of all, exchanges do not want to be over capacity, ever. Stipulating this is absurd and insulting. No one wants to ever have incomplete records due to overcapacity events. What is demanded here is a strictly technical requirement that the CFTC has no business asking for. The shareholders of every company working with Bitcoin demand fine-grained information and reporting, as do the users of the trading systems. If any company does not produce rich data, consumers will move to services that do. The market takes care of this. CFTC is not needed at all and their interference is un-American and unwelcome by real Americans.
Record keeping is a business operation that should only be done to the satisfaction and requirements of the business owners, shareholders and their clients, and not for the needs of the CFTC. If they want people to do the record-keeping work, they should ask politely and then pay for the records to be maintained, since they are being kept for the CFTC and no one else.
Compulsory reporting of information should be under warrant only and not from a blanket demand of “anything we want, any time.” Who do these people think they are? And the same goes for the SEC, tagged along here.
Of course, you would expect these agencies to abuse your information and spread it across all branches of the American government, including NSA, CIA and all the other secret agencies. It’s wrong and can be prevented. What is astonishing here is that they’re making it law that the CFTC will share the information of American corporations and citizens with foreign ministries. How can anyone calling themselves a “Republican” draft such an outrageous and sovereignty-violating statute? It’s breathtaking and shocking. Absolutely, purely anti-American.
There is only one conflict of interest on display here: the conflict of interest between the CFTC and American entrepreneurs and citizens with this abusive, anti-competitive, irrational, ridiculous, onerous nonsense.
How is any business going to have financial resources on hand to serve customers when they’re being blackmailed into spending money to satisfy the unquenchable thirst of the CFTC? Why does the wind-down clause not come with an opt-out for users who want to take the risk of dealing with a company that doesn’t make the promise to hold wind-down contingency funds? They allow an opt-out for other things. Why not this? Why not allow an opt-out for the whole shabby bill and its scandalous provisions?
All of these are business and software requirements full of words that the drafters clearly don’t understand. For example, what does “reliable” mean in terms of … anything? As for risk analysis, complex systems that interact in office and over APIs have multiplicative error scenarios and failure modes that can’t be predicted very easily. Trying to war-game these out in advance is an entirely unreasonable requirement, and in any case, the people who build these systems know what they’re doing in general and understand that they have to maintain uptime, a word these drafters are clearly not familiar with in this context.
Testing and other technical measures, techniques, procedures and the myriad tasks that system administrators do should not be a part of any law. All technical measures and specifications are private matters for companies, who can buy insurance against faults if they want. Similarly with backups: Backups are only one way of ensuring continuity. If users have their own private keys, no backup is required at the company level. This shows the drafters are in fact computer illiterate and don’t have the necessary imagination to draft legislation — were it legitimate in the first place — that covers all possible arrangements of software in a business.
The line about the audit trail is similarly absurd. They don’t like Bitcoin, but want a perfect audit trail — which Bitcoin provides out of the box. Bitcoin is the audit trail by design, but if they concede this, they have to acknowledge that bitcoin isn’t money, but an audit-trail database.
Tough times for the computer illiterate!
These people seem to understand that everything they’ve drafted could be horribly wrong and destructive to America’s dominance in this new field. This is why they’ve put in this trapdoor to exempt any company that is doing well from these ignorant and ill-advised rule proposals, which can be revoked retroactively, meaning that if a company becomes a trillion-dollar service serving people globally, they’re making a provision so that that company can be left unmolested because it is part of the critical infrastructure — like the banks they bailed out, who were exempted from the rules due to the threat of systemic risk.
They are carving up this new database industry and handing out the pieces to their cronies. They’re also saying here that they can add to these insane rules at any time; that’s what “prescribing rules” means — more poison pills.
As for the requirements not to register, all that is needed is to incorporate outside of the USA. It’s easy to do, and many companies working with these new databases do it. This avoidance behavior is a precursor to what’s coming: No one with a brain cell and a passport is going to put up with this if it becomes law, and other jurisdictions are licking their lips as they read this because they know it is going to push hundreds of billions of dollars into their jurisdictions.
This is a generic example of how they’re polluting other legislation in this bill. They are adding the fictitious term “digital asset” all over the place to capture any database that simulates money. Some intern went through other legislation and selected places where this invented term can be inserted. The legal and business side effects of these multiple insertions are unknowable in advance. Adding this language puts many industries and individuals at risk, and as Nancy Pelosi famously said, “We have to pass the bill so that you can find out what is in it.”
They’re trying to enshrine the conflation of physical assets like gold and entries on the Bitcoin database. There is no such thing as a “digital commodity.” That term is an analogy created to help computer illiterates understand how these new database arrangements can be used; it is not a description of what they actually are. Lummis and Gillibrand have missed this entirely and been tricked into thinking an analogy is reality.
They have to redefine what a financial institution is because database companies are not financial institutions. This section is a key indicator of the nature of this bill and the land grab that is being attempted.
So, having created this abominable anti-American farrago, they’re proposing to push the cost of administering the rules they have created onto the people running the services. This is absolutely despicable. If these corrupt, debased, debauched, degenerate, depraved, disgraceful, disreputable, perverted, profligate and shameless thugs obeyed their oaths, there would be no extra costs to business people who simply want to serve others, which is their absolute right. What a nerve these people have.
Oh, they’re so kind! Remember the appalling and destructive New York “BitLicense,” where applying for it is so expensive that Bitcoin companies simply choose not to do anything there, rather than pay? Here is a pro tip: Companies will leave America entirely rather than be exposed to the insane risk, exorbitant and unethical fees, the predation, prejudice, inconvenience, consumer violation by law and morally repugnant rules these monsters are threatening everyone with.
For way less than the cost of a BitLicense, a company can incorporate in Hong Kong and be totally free of this totalitarian nonsense. They can incorporate in El Salvador, where the government is embracing innovators … and the weather is good there too.
There is no reason any entrepreneur anywhere on Earth needs to put up with this. In the disastrous outcome that it should become law, it will mean that other countries will gain the businesses that are de facto prohibited in the USA and American citizens will use those services — without the permission of anyone, just as they do other things that are forbidden by the State in the USA, like “online gambling.”
Bitcoin, like pirated software, cannot be stopped. All of the incentives of pirated software exist in Bitcoin, except they are exponentially bigger in every way. The desire to get the latest software and movies is very strong; just imagine how strong the incentive will be to get bitcoin, since you need it to buy things online and exist? The company that solves “the bitcoin delivery problem” will be a multibillion dollar unicorn, and it doesn’t have to be based in the USA either. None of the drafters of this sad, tawdry bill understand these facts.
If they had any sense, ethics, understanding or fealty to the oath they swore, these members of Congress would do nothing and let the market sort everything out for itself. Then, once the new market is established, they can gently milk it. The problem is these people are old and dying, and they want to hurt as many young, vibrant people as they can because they’re jealous of Bitcoiners and the power being unleashed by Bitcoin. They’re like a dying, old coot, doing his best to put the knife in one last time by changing his will to cut out his disobedient children.
This scandalous bill gets stupider the deeper you go into it. How can a protocol ensure that the scope of permissible transactions that may be undertaken is disclosed in a customer agreement? A protocol is not a person, has no rights or obligations and can’t be compelled to do anything. How can people be so stupid?
This is totally absurd. Under “9802. Consumer protection standards for digital assets” if bitcoin is classified and captured as a “digital asset” then prior to any updates, the users of Bitcoin would need to be informed before material source code version changes. Each customer. Which is 100% insane. Of course, there is no Bitcoin company at all, which leads to the question, are developers on Bitcoin itself going to be attacked by the CFTC for doing “git push?”
Since Bitcoin is not a company or a person, clearly none of this should or even could apply to it. That means that either bitcoin is not a “digital asset” or they’re just going to ignore Bitcoin as a thing, and only go after tools where there is an identifiable company and people who they can persecute and torment.
If on the other hand, bitcoin is classed by them as a “digital asset,” how are they going to administer any of this? By misusing English and terminology, they’ve built an effigy that makes no sense at all and doesn’t take reality into account.
This section shows the problem. Are they actually claiming that a fork of Bitcoin is a “subsidiary proceed?” Anyone can fork any code repository and create their own chain; there are even tools online that allow you to create your own clone of Bitcoin, delivering you the software you need after filling out a simple form. Under this bill, that would be a regulated act, as would making a complete copy of Bitcoin and its transaction history (block chain).
Once again, these people are computer illiterates who don’t understand anything, and who are flailing about, trying to appear relevant. They’re actually super dangerous anti-Americans and I hope their bill is rejected in its entirety to avoid real Americans going to SCOTUS to have it destroyed.
The meddling continues. What the section on line 5 says is that matters of source code and not function will be agreed to in writing. It is extraordinarily rare that any consumer will have any knowledge of the source code used to perform a consumer function, and the mandatory exposure of proprietary and secret source code is a rights violation. The people who wrote this don’t understand anything about software or how it is developed.
If this section is justifiable and reasonable for altcoins, why hasn’t the Senate and Congress mandated similar rules for Microsoft Windows and Apple iOS? More money and lives depend on those operating systems than on “cryptocurrency.” What about all of the other software packages that the world relies upon, like OpenSSH, Apache and every other package that runs literally everything on Earth? These misguided people have no idea what they’re talking about and have conjured this nonsense out of a complete misunderstanding of what software is and the well-established, safe and accepted ways it is developed, deployed and updated.
Forbidding changes in source code or the way networks work by changing the source code, should this insanity on stilts become law, will immediately prevent the beleaguered Ethereum project from switching to proof-of-stake from proof-of-work.
Let’s imagine for a minute that you’re drunk on Tequila and you imagine that switching from proof-of-work to proof-of-stake will be a good thing for Ethereum; it would not be allowed under the Lummis-Gillibrand bill under these rules. This section means that once a system is released and people are relying on it, it will not be possible for it to pivot to something better or anything. This is Kingdom of Moltz-level anti-innovation. Users are never, ever consulted about source code. Anyone who has any experience in this knows that. The drafters of this are totally incompetent and ignorant.
Settlement finality, which is the wrong phrase for what happens when something happens in Bitcoin, is not a feature of tools where there is consensus governed by super nodes who can collaborate to undo transactions. The conditions under which things happen in a database are not the business of the CFTC, but are business logic to be determined solely by the software developers and the business owners demanding and designing features. This is like the Soviet Union making commands about economics and the mechanics of tire manufacturing.
Legal certainty is not required in Bitcoin transactions; that is why the code was written in the first place. Users have certainty in math, not legal enforcement. The fact that the authors say this shows they have no idea of why Bitcoin was written or what the certainty of math really is. The law is not required to guarantee anything in Bitcoin; it guarantees itself and protects its users from characters like Lummis and Gillibrand.
This is very interesting. The European Union is planning on outlawing “unhosted wallets” where messages can be initiated without the need for a third party. That means any of the ethical Bitcoin wallets — Samourai, Breez, Wallet of Satoshi, Muun, Pine, Phoenix — may be made illegal in the EU. This section is diametrically opposed to that idea, saying that no one should be compelled or required to use a “hosted wallet.” Clearly, wallet developers who maintain the tools in the above list and any wallet where users have full control over Bitcoin will have to address this, ending up in the USA and shunning all EU customers. In any case, you can expect the Apple App Store and Google Play to remove all “unhosted wallets” to comply with EU fascism and crony capitalism.
Somehow, some cheeky intern snuck this into the draft of this bill. You can be sure it will be removed once someone points out what it really means. It contradicts itself with section (1); having your own keys explicitly permits any person to engage in market activity for which authorization is required under federal or state law — without any authorization or permission. It means you can transact freely without permission, you cretins.
I’m skipping the part about “stablecoins.”
These people seem to understand that Bitcoin and other tools completely destroy their punitive and unethical collective-punishment “sanctions regime,” and not having found an answer in time for the drafting of this abomination, kick the can down the road to other people who will also not be able to solve this unsolvable problem.
Bitcoin is like the invention of math itself; it is a fundamentally new tool that once unleashed, will have effects that can’t be contained. It’s like unleashing the idea of the wheel and then expecting no one to make use of it, or trying to reduce the efficiency of the transport of goods moved on wheels by strictly licensing how carts on wheels can travel and who is allowed to use them.
If you think that’s insane and could never happen in reality, you are ignorant of the Locomotive Acts (or Red Flag Acts) that were introduced when motor cars were beginning to gain popularity. Oddly enough and unironically, Lummis is calling for “rules of the road” in Bitcoin. You couldn’t make it up if you tried.
The Comptroller of the Currency, being tasked with assessing “payment system risk,” is putting the fox in charge of the henhouse. When they say “payment system,” they mean the corrupt Federal Reserve system and all the cronies that feed off of that system and the public. Anything that poses a risk to that — Bitcoin and its ecosystem of companies — is an enemy, even when, as in the case of Bitcoin, the public and the United States itself will benefit by the emergence of a parallel system that is not under the comptroller’s power to control, supervise or develop rules for.
As for “community contribution plans,” by merely existing and serving people for a profit, Bitcoin companies are contributing to and protecting “the community” because they’re insulating them against the lethal inflation and theft in the legacy financial system. Consumer education happens automagically by people being shown that bitcoin is better, and doesn’t need to be compelled. As for “financial literacy,” that actually means propaganda and lying to keep the public gulled and believing that the fiat system is safe and fair, when it manifestly is not.