State Regulated Cryptocurrency? Decentralise Everything!

Liz Louw
Liz Louw
29 January 2018

January 2018 has been a month of global regulatory-muscle flexing. The target: the cryptocurrency industry. As a cryptocurrency investment firm, we comply with UK financial services regulations voluntarily, to promote responsible investing practices and mainstream adoption. In this light, it has been difficult to get our minds around the global movement to forcefully regulate the industry, and in some cases to even ban cryptocurrency transactions in totality.

On the one hand, we too have been concerned about irresponsible investing and trading practices that have infiltrated the industry. Investor practices such as buying cryptos on credit card, putting themselves at risk of defaulting on their debt repayments when the market price drops. Exchange practices such as the promotion of margin trading that over-leverages user capital, putting people at risk of ending up indebted beyond their means of repayment.

On the other hand, when government bodies step in to announce their intent to regulate the industry, claiming the motive of protection of the individual investor, it makes the hair on the back of our necks stand up.

The Bitcoin economy provides a path to socio-economic reform, offering individuals independence from state-controlled capital, and a choice in how, where, when and what we spend our money on.

While we are very much in favour of regulations that truly protect investors, handing over the keys of the castle to state-controlled regulators defeats the purpose of Bitcoin. It also puts the wolf in charge of guarding the sheep...

Cryptocurrency Regulations, in Whose Interest?

For the most, government regulators defend their move to regulate the cryptocurrency industry under the guise of guarding the interest of the common folk. But, modern history and present-day UK policies tell a different story.

British journalist and environmental and political activist, George Monbiot points out the hypocrisy of the UK government’s claim to be guarding the national interest:

“It is an amazing thing that we are seeing happening at the moment: this complete meltdown of a government whose great selling point was that they were strong and stable in the national interest. The people who claim to be the guardians of the nation, the upholders of patriotism, are actually the biggest subversives in the country, treacherously betraying the national interest.”

Monbiot lists various abuses of political power that have recently come to light, including the Priti Patel scandal where the taxpayer’s money was transferred to a foreign military power under the guise of helping people in dire need. He points to Brexit, which was promoted under the mantle of freeing the UK from the yolk of foreign powers, but ended up as the UK selling out its national interest to the United States.

“The very people that call themselves patriots and defenders of our national sovereignty have tried to sell us out to the highest bidder,” concludes Monbiot.

Neoliberalism: What Happened to the Free Market?

Investigative journalist, Naomi Klein, frames this betrayal of national interest for corporate gain within the ideology of Neoliberalism - an undisclosed economic ideology that has been subverting democracy and capitalism in the West for the past four decades.

Klein describes neoliberalism as a set of policies that promote the privatisation of basic services, deregulation in the interest of corporations that get masqueraded as ‘Free Market’ policies, deep cuts to social spending, as well as healthcare and education cuts.

While we, in the Western world, commonly believe that we are following a capitalist economic model, a Free Market, the reality is that neoliberalist policies have been ushered in while we were ‘distracted’. Klein explains:

“After a shocking event, a war, a coup, a terrorist attack, a market crash, or natural disaster, the government exploits the public’s disorientation to suspend democracy in order to push through radical policies that enrich the one per cent at the expense of the poor and middle class.”

In Latin America, this economic model is known as ‘Il Modello’ and was first imposed on Latin America through military dictatorships (dictators that were brought to power through coups that were facilitated by the US special forces), then through conditions to loans by Western governments, the International Monetary Fund, the World Bank, and the World Trade Organisation.

In the early 2000’s, two decades after implementation, the model started collapsing in Latin America and one country after the next began overthrowing the governments that had been enforcing the model. The model’s legacy of inequality was so dramatic and the promise of the ‘trickle down of wealth’ had failed so miserably, that the citizens of Latin American countries rejected the entire model.

In 2000, Bechtel, a Californian engineering giant was thrown out of Bolivia when citizens revolted against the company’s privatisation of the national water system and subsequent hiking of rates by more than 50%. As the USA invaded Iraq, Bechtel suddenly showed up in Baghdad with an exclusive contract to rebuild the Iraqi water system. In Iraq, the model wasn’t even being sold with promises, it was imposed with raw violence.

And if you thought that Western countries only enforce neoliberalism on foreign nations for the benefit of the home country, think again.

George Monbiot argues that neoliberalism is at the heart of the UK’s national problems including the collapse of public health and education, resurgent child poverty, the epidemic of loneliness and the collapse of our ecosystems.

Decentralise EVERYTHING!

According to one of the latest reports on the movement to regulated cryptocurrency, the International Monetary Fund (IMF) has called for global coordination on cryptocurrencies to protect consumers against its risks. We are sceptical of their motives.

American writer and public intellectual, Gore Vidal, is famously quoted as saying that:

“Any American who is prepared to run for president should automatically by definition be disqualified from ever doing so.”

We believe the same could be said for institutions and individuals who seek out to regulate the financial liberties of others.

For decades Western governments have promised us a Free Market system while rigging the system to benefit the businesses that have bought their favour. If this is the kind of ‘protection’ that regulators are offering us, we want none of it. We want liberty.

As Jeff Deist, president of the Mises Institute, declares “We believe in liberty not because we know what is best for the world, but precisely because we do not know— and neither do politicians and elites. Washington, DC cannot competently address the needs and hopes of 320 million Americans, much less 7.5 billion people around the world.”

Cryptocurrency, due to its decentralised nature, distributes power in an unbiased manner, rewarding utility instead of social class or political position. It is able to function as a true Free Market, where competition levels the playing field to encourage technological advancement and prevent power grabs.It promotes the concept of financial inclusion that seeks to give disadvantaged people and small enterprises better access to the financial system.

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