Bitcoin - the false narrative
When a government wants to exercise greater control over some sphere, the narrative (or the framing of the argument) it is trying to set is important. Ceteris paribus, most human beings prefer less government involvement in their lives. When the now controversial USA Patriot Act was introduced in October 2001, just a few weeks had passed after the 9/11 attacks. The timing was perfect for the anti-terrorist narrative that was being spun by the George W. Bush administration.
Momentarily, the nation was still shell-shocked after the recent events and terrified by the possibility of new terrorist attacks, thus this initiative faced relatively little opposition. Most likely, this piece of the legislature could not have been enacted at any other time in American history.
When governments crack down on money laundering and offshore investments, the narrative is typically similar – eliminating the sources of financing of terrorists and drug cartels. In case of money laundering, it’s not the general public that needs convincing since the common folk doesn’t bank on the Caymans or Cyprus – however, it is about the elites.
Oftentimes, the same parliamentarians who work on such legislation are the same people who use offshores to “optimize” their tax burden and it is also their backers who do. Thus, the right narrative is essential for passing these laws, and then explaining it to the donors. In addition, the stirred public opinion can be used to put pressure on the elites.
So why do they bother in the first place? It's because over the last several decades, many of the G7 countries have experienced chronic budget deficits – and, as a result, skyrocketing national debt. Literally, they could not afford to ignore this issue any longer.
Mr. Movchan, a notable Russian researcher and asset manager whose company provides offshore services, noted in a recent interview:
The hunt for the offshore money began. But it was impossible to start cracking down on major businessmen just like that, it would have faced strong opposition of the giant business lobby. That is why they came up with an ingenious plan, it was said that the crackdown is not on the businessmen who use offshores, but they are going after the terrorists. The offshores were accused that they hold a lot of “black money”: you are hiding the dictators’ money, you are hiding the terrorist money, you are hiding the money of the corrupt bureaucrats, we need greater transparency.It’s important to keep this in mind when various governments wishing to crackdown on Bitcoin and cryptocurrency in general, cite money laundering and other illicit activity as its motivation. According to the U.N., between $800 billion and $2 trillion is being laundered annually.
Had much of it been done via Bitcoin, we would see different prices and volumes. “The bitcoin trading volume indicates, that nobody generally tries to find a safe haven in bitcoins” adds Mr. Movchan. It’s not to say that no one in the history of Bitcoin has never used it for something that is illegal or immoral. We know for a fact it has been at times used by criminals; however, it is also a fact that the biggest most publicized money laundering cases have involved such institutions as Deutsche Bank, Wachovia, HSBC, BNP Paribas…
The same industry that is trying to set the Bitcoin narrative as "dirty money that is being used by criminals and terrorists". In the case of Bitcoin, it is unlikely, that the true motivation is discovering the new means of balancing the budgets as the entire crypto market is just pennies in comparison. More likely, it is driven by uncertainty about this new phenomenon that is difficult to discern. And most regulators have "when in doubt, it's better to err on the side of caution" as their motto. It implies that the proponents of Bitcoin should focus on establishing a more positive narrative instead of talking about "disrupting everything".
Read more:
- G20 regulations: What does it mean for crypto?
- Why Africa needs cryptocurrencies
- Warren Buffet still not bullish on bitcoin, recent comments show
Originally posted on Crypto Insider : https://cryptoinsider.com/bitcoin-the-false-narrative/