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Surrendering to Surveillance and Control



Christine Lagarde once argued that CBDCs could satisfy public policy goals linked to financial inclusion, consumer protection, and fraud prevention. The ex-IMF chief, however, failed to mention that CBDCs are mere digital versions of fiat currencies and can be weaponized as a total state surveillance and control tool.

In the extreme, central bank digital currencies (CBDCs) simply maintain the status quo. As Bitcoin took a foothold in unmediated economics, shocked governments brought up CBDCs off-schedule to lull the crowd back to their disturbed dream of fiat hegemony.

“I believe we should consider the possibility to issue digital currency,” Lagarde said at a conference in Singapore in 2018.

“There may be a role for the state to supply money to the digital economy. The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous. And central banks would retain a sure footing in payments,” she added.

CBDCs: Absolute central bank control

Lagarde comes from the same school of thought as Agustin Carstens of the Bank for International Settlements (BIS). Carstens told a 2020 IMF meeting that “central banks will have absolute control on the rules and regulations” that determine the use of CBDCs.

While crypto aficionados digested the right-wing tropes tied to CBDCs and soaked up the remote sounds of big Bitcoin skeptics, Ethereum quietly became state-compliant.

Ethereum merged on Sept. 15. It gave power to a small group of entities that are powerless to resist US government sanction committees. Ethereum potentially desecrated the Mecca of old-style Bitcoin purists on privacy. Just like CBDCs.

“Primarily, [with CBDCs] we do not have the same guarantee of transaprency that major stablecoins naturally provide (via the use of commonly used tools such as Etherscan, for example),” Jared Polites, partner at Rarestone Capital, told BeInCrypto.

“We do not know how governments will use the data, which data they will collect, how to accurately attribute data to people in edge cases, how third party applications and other services will integrate and provide security, etc.”

Polites added, “we simply do not have a clear enough picture of how CBDCs will be rolled out. And applied to guarantee they will be more efficient to the current majors such as USDC [stablecoin].”

Central bank involvement in digital currencies may be viewed as intrusive. Governments could impose unnecessary controls that hinder transaction speeds while sacrificing freedom and lower costs.

What is a CBDC?

Central banks issue CBDCs. They were created in part to neutralize Bitcoin. About 105 countries, representing 95% of global GDP, are actively exploring the possibility of issuing state-backed cryptocurrencies, according to the Atlantic Council’s CBDC tracker.

In May 2020, only 35 countries considered a central bank digital currency, it said. At least 50 countries are in an advanced phase of exploration, which means development, pilot, or launch. About a dozen states and countries have already fully launched a digital currency.

China’s digital yuan pilot will expand throughout 2023. Jamaica is the latest country to launch a CBDC, the JAM-DEX. Nigeria, Africa’s largest economy, launched its CBDC in October 2021, which has struggled to gain traction.

According to a previous BIS study, central banks can issue two types of digital currencies – wholesale and general purpose. Wholesale CBDCs are generally limited to specific tasks such as interbank payments.

General-purpose digital currencies are designed to replace cash. They will be made available to the public. Some central banks from Canada, Singapore, and South Africa replicated wholesale payment systems using distributed ledger technology.

This is the same tech behind major independent crypto assets like Bitcoin. All of the above countries initially refused to acknowledge the impact of cryptocurrency in their economies. Central bankers regarded crypto as a niche pursuit rather than as the future of money.

Changing attitudes

Cashless transactions soared around the world in recent years. Many of the control freaks who work for various governments have become unsettled.

For example, Bitcoin challenges the conventional financial system. It aims to return the ownership of money to the people beyond the reach of the state. Steeped in tradition, global financial gurus did not endear themselves with Bitcoin’s vision.

Unsurprisingly, many governments have raised concerns about crypto assets. They have also called for tighter regulation while angling to issue their own versions of centralized digital currencies.

Christine Lagarde, the former IMF managing director, said previously that a state-issued cryptocurrency would be a liability of the state, just like fiat money. She also stated that CBDCs could reduce the cost of transactions while maximizing security and spreading adoption.

But they would not be censorship-resistant cryptocurrency in the true sense, according to observers. Stablecoins such as Tether’s USDT and Circle’s USDC compare favorably to CBDCs.

“Current stablecoins are global so in nature more decentralized,” Jared Polites, the Rarestone Capital partner, told BeInCrypto, adding:

“They are fully transaprent and are built with the same technology that powers most of the ecosystem, making them a natural fit for new products and services. Most, if not all, major reporting and tracking tools are compatilble, meaning there is full transaprency without jeaopordizing individual privacy on the surface level.”

Privacy threat

Crypto’s short history is a place for finding roots, constants, and recognitions. Pilgrims withdraw from modern times to contemplate the “noblest periods, the highest forms, the purest individualities,” as French philosopher Michel Foucault puts it.

But government snobs never seem to stand for libertarian, human-centered ideals for too long. A UK Parliament’s Economic Affairs Committee report found that “a CBDC could present significant challenges for financial stability and the protection of privacy.”

“Any CBDC system could not support anonymous transactions in the same way that cash can be spent anonymously,” said the report.

“While there are design options that would provide some privacy safeguards, technical specifications alone may be insufficient to counter public concern over the risk of state surveillance. The Bank of England risks being drawn into controversial debates on privacy.”

According to analysts, CBDCs may censor non-ordained addresses, and central banks will continue to control the monetary policy. On the surface, it seems like a digital dollar, yuan, or pound might displace Bitcoin’s growth because they are all digital. But it fails to address these principal concerns.

South Korea’s central bank warned in the past that adopting a state-backed cryptocurrency as an official form of legal tender would threaten the country’s financial stability. In a report, the Bank of Korea said a CBDC could result in a spike in interest rates and a liquidity crunch.

The idea is that as depositors withdraw money from the bank, commercial banks will fall into a liquidity trap, forcing the money supply to drop. This will ultimately see interest shooting up.

CBDC Crypto

Ethereum centralization

Centralization concerns have plugged Ethereum since its mainnet merged with the Beacon Chain in September. Observers worry the new chain could give major stakers power to block transactions in compliance with regulatory demands.

This goes against the cryptocurrency ethos of privacy and decentralization, they say. Jared Polites told BeInCrypto that the crypto community had split opinions on the current state of Ethereum.

“One side sees it as a threat to the decentralized goals of the network, others find it a natural progression to a more used Ethereum ecosystem across the globe,” Polites stated. “The risk is there are nuances that make compliancy very tricky.”

For example, someone with OFAC violations decides to send or ‘dust’ famous wallets owned by high-profile compliant individuals. By nature, he said this interaction would classify the receiver wallet as violating OFAC sanctions or compliance.

“This does not make sense as they were not in direct communication, business, or dealings with the violator. There needs to be clear policies in place to allow CBDCs a chance to gain the trust of the crypto community as well as make compliancy easy for users that fall within certain jurisdictions,” Polites added.

Financial freedom

The Beacon Chain coordinates a network of stakers and introduced PoS to Ethereum. The switch to this new chain started in November 2020, as a one-way bridge began taking deposits. It secured millions of ETH from several validators (stakers).

Only four entities – Binance, Coinbase, Lido, and Kraken – control about 66% of all the ETH staked on Beacon Chain.

In our time, we take for granted the idea that Bitcoin, as a proxy for cryptocurrency, is a voice. For Bitcoin fundamentalists, political and financial freedom is nothing if not the handmaiden of privacy and decentralization.

We want to lean into Bitcoin to imagine an alternative reality. But Bitcoin is already positioned to do this as a self-existing universe. Rather than as a conditioned speech act, as epitomized by central bank digital currencies.


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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets




The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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Digital Wallet Growth Will Enable More Closed-Loop Transactions




Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.

Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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Strike Launches Lightning Remittances in the Philippines




Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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