[00:30.080 --> 00:31.400]  Hi, everyone.
[00:31.820 --> 00:32.380]  Hello.
[00:33.800 --> 00:34.360]  Welcome.
[00:35.280 --> 00:38.660]  So, it's the last talk of the day for this theater.
[00:40.320 --> 00:41.840]  How are everyone enjoying HOPE?
[00:42.000 --> 00:43.260]  Everyone having a good time?
[00:44.380 --> 00:44.940]  Great.
[00:46.320 --> 00:47.140]  That's great.
[00:47.380 --> 00:48.540]  I like the enthusiasm.
[00:49.280 --> 00:51.400]  So, welcome to this talk.
[00:51.780 --> 00:53.280]  We're going to talk about payments.
[00:53.940 --> 00:55.620]  So, you pay for that.
[00:55.940 --> 00:57.980]  Payment, surveillance... Sorry.
[00:58.120 --> 01:00.360]  Payment systems, surveillance, and dissent.
[01:00.740 --> 01:03.360]  So, please welcome Alex Marthius.
[01:07.840 --> 01:08.760]  Hi, everyone.
[01:08.940 --> 01:12.500]  And thank you for sticking it out through to almost the end of HOPE.
[01:12.800 --> 01:17.020]  And I am hoping to make you feel even more hopeless by the end of this.
[01:17.500 --> 01:18.560]  So, yay!
[01:19.080 --> 01:20.360]  I'm Alex Marthius.
[01:20.540 --> 01:22.220]  I'm the National Chair of Restore the Fourth.
[01:22.220 --> 01:27.140]  We do civil liberties work in the area of privacy and surveillance.
[01:27.620 --> 01:50.400]  And I've grown more and more interested in the topic of payment systems and government power and how that can be used to affect people's ability to transact and associate and, therefore, their ability to dissent from whatever their government is pleased to think is the right opinions and the right practices.
[01:51.360 --> 02:01.340]  The immediate spur for this kind of thinking for me came in 2019 and related to a fairground ride.
[02:01.740 --> 02:14.460]  So, my family and I were traveling in China and I had three kids who were very interested in riding on the fairground rides and they could not.
[02:15.760 --> 02:18.880]  They could not because they could not use cash.
[02:19.860 --> 02:29.760]  And, unlike at U.S. fairgrounds, there was not a system of tokens where you could pay using a credit card or cash and then be given tokens and then use them on the ride.
[02:30.660 --> 02:38.980]  Instead, the only payment mechanism that was viable for my kids to get on these rides that they really wanted to get on was to use WePay.
[02:38.980 --> 02:46.100]  WePay being a Chinese system that grew out of the social messaging app WeChat.
[02:46.880 --> 02:52.480]  And you cannot get a WeChat account without having a Chinese national ID.
[02:53.320 --> 02:59.540]  A matter that we thoroughly researched before going to China because we knew it would be kind of convenient to be able to use WePay.
[02:59.540 --> 03:06.060]  But there was literally no... well, there was literally no legal way that we could get a WeChat account.
[03:06.300 --> 03:08.860]  So, our kids were fresh out of luck.
[03:09.780 --> 03:14.040]  And why is this convenient and good for the Chinese government?
[03:14.320 --> 03:22.300]  Well, frankly, there aren't that many tourists coming to China who have no access to anybody with a Chinese national ID.
[03:22.300 --> 03:26.040]  So, the problem from their perspective is relatively small.
[03:26.520 --> 03:41.980]  And the benefits to the Chinese government of having a payment system that is anchored to social messaging in an integrated collection of apps is enormous from their perspective.
[03:41.980 --> 03:53.800]  For all of the reasons from their perspective that the U.S. government or other governments use when they're considering what kind of financial surveillance to conduct.
[03:54.080 --> 04:01.680]  The suppression of terrorism, the suppression of money laundering, the suppression of fraud, the suppression of theft.
[04:01.680 --> 04:05.720]  These are all the same sort of familiar arguments.
[04:06.420 --> 04:12.240]  And so, unfortunately, my family were not terrorists.
[04:14.820 --> 04:26.600]  And a lot of the history of payment system surveillance traces back to efforts to suppress terrorism funding.
[04:26.600 --> 04:32.660]  So, here, for many of you in the room, you already know some of this.
[04:32.800 --> 04:39.760]  But we're going to just briefly canter through some notable elements in the history of payments and surveillance.
[04:40.240 --> 04:47.960]  So, the PATRIOT Act in 2001 establishes the new offence of material support for terrorism.
[04:47.960 --> 05:00.160]  It requires organizations that are transmitting money to foreign countries to certify that those they're sending money to are free of links to terrorism.
[05:02.500 --> 05:15.080]  And it strengthens know-your-customer requirements and anti-money laundering requirements, all with the intent of trying to prevent the financing of terrorist attacks.
[05:16.780 --> 05:30.400]  At the time I was running a non-profit that sent substantial amounts of money abroad, we wired money to schools in East Africa for the sponsorship of girls for their secondary education.
[05:32.860 --> 06:01.080]  So, if we had been following the letter of what the Patriot Act required, then what we would have needed to do in each of the schools that we wired money to was to sit down with every employee of the school, every teacher, every other staff member, and to interview them to ascertain that the money that we were sending was not going to go to fund terrorist-related activities.
[06:01.760 --> 06:03.920]  And frankly, we were never going to do that.
[06:04.420 --> 06:06.500]  Because I love Sister Salome.
[06:06.660 --> 06:09.900]  She's an awesome person and definitely not a terrorist.
[06:11.760 --> 06:16.460]  And just for completeness, neither of the girls next to her are terrorists either.
[06:18.260 --> 06:32.320]  But, you know, we were not going to be targeted in the same way for doing that, because the Patriot Act's financial surveillance requirements were not really targeted at girls' scholarship programs.
[06:33.680 --> 06:39.940]  So, a well-known case during the 2000s was the Holy Land Foundation case.
[06:40.240 --> 06:57.600]  The Holy Land Foundation, at the time of 9-11, was the largest Muslim charity in the U.S., and it funded education and support programs in the Palestinian territories.
[06:57.760 --> 07:02.940]  At the time, the Gaza Strip was ruled as it is today by Hamas.
[07:03.720 --> 07:14.240]  And the U.S. government, rapidly after 9-11, initiated a prosecution for material support for terrorism on the Holy Land Foundation.
[07:15.400 --> 07:27.500]  There was a trial, it ended with a mistrial, with one of the jurors declaring publicly that links between, the alleged links between the Holy Land Foundation and Hamas had all the strength of a wet noodle.
[07:28.560 --> 07:41.320]  But there was another trial, and the FBI got a conviction that they celebrate on their website to this day, which included senior Holy Land Foundation figures being sentenced to 65 years in prison.
[07:41.320 --> 07:42.360]  So, yay, FBI!
[07:44.280 --> 07:48.260]  Moving forward a few years, we have...
[07:48.260 --> 07:57.800]  Yes, moving beyond the sphere of Islamic terrorism to other activities disfavored by the U.S. government.
[07:58.220 --> 08:11.040]  And after the publication of over 200,000 U.S. diplomatic cables, Wikileaks was blockaded for donations by PayPal, MasterCard, and Visa roughly simultaneously.
[08:12.120 --> 08:21.180]  A senior executive of PayPal on an earnings call explained that this was because the State Department had told them to do that.
[08:21.580 --> 08:28.860]  The State Department weighed in very, very rapidly and said that they had never asked them to do any such thing, and they maintained that position to this day.
[08:29.840 --> 08:32.720]  MasterCard lifted their blockade in 2012.
[08:32.960 --> 08:39.260]  I'm not sure when or whether PayPal or Visa lifted their blockade.
[08:39.420 --> 08:53.480]  But here we see the dynamic starting, which we're going to see in other nonprofit groups during this talk, of Wikileaks turning to cryptocurrency donations to sustain their operations.
[08:53.920 --> 09:00.620]  And that is something that they still do today in major parts to fund the defense of Julian Assange.
[09:03.580 --> 09:17.840]  During the 2010s, we also saw the development of crowdfunding sites, most famously GoFundMe, but also its right-wing alternative Give, Send, Go.
[09:24.280 --> 09:32.980]  These sites are relatively easily subject to disruption by nation states because they use the regular banking system.
[09:34.420 --> 09:46.140]  And Give, Send, Go ran into trouble with the Canadian government because it was a major vehicle for donations to the Canadian trucker protests against COVID restrictions last year.
[09:46.140 --> 09:56.540]  And the Canadian courts weighed in to block the movement of the money, and there were also prosecutions of individual donors.
[09:58.960 --> 10:13.980]  You can see, for those who have a little familiarity with the Fourth Amendment, that a lot of these third-party fundraising sites raise the issue of the third-party doctrine.
[10:13.980 --> 10:14.100]  Doctrine.
[10:14.260 --> 10:30.680]  This is the doctrine whereby the U.S. government can approach entities with whom you share your data, and can subpoena them or get a warrant for access to their data.
[10:31.000 --> 10:38.020]  And you yourself do not necessarily get informed and are not necessarily part of the process.
[10:38.020 --> 10:48.780]  It's all like you're considered to have exposed your data to the third-party vendor's use, and then it's a matter between the third-party vendor and the government.
[10:49.040 --> 11:00.500]  The third-party doctrine is a little bit weaker now than it was ten years ago, but it's still a very live element facilitating the U.S. government's collection of data.
[11:02.780 --> 11:15.380]  We also have, during the latter part of the 2010s, the development of using blockchain to develop peer-to-peer transactions outside the regular banking system.
[11:15.540 --> 11:39.500]  They're not necessarily anonymous by design, but this whole ecosystem with the fancy name of DeFi for decentralized finance evolving to try to provide people with alternatives that have lower transaction fees, that are faster, that enable people to move money around internationally with more convenience.
[11:39.920 --> 11:46.840]  And that then generates regulatory issues that the U.S. government is really only beginning to grapple with.
[11:49.300 --> 11:54.020]  We also have evolution of the SWIFT system.
[11:54.180 --> 12:09.900]  The SWIFT system has been around since 1973, and originally it was set up by a consortium of six Western banks, really just as a standardized messaging system for the settlement of international transactions.
[12:09.900 --> 12:15.760]  So they have standardized codes for banks.
[12:15.760 --> 12:20.360]  It makes it a lot easier to transmit money, a lot less burdensome.
[12:21.560 --> 12:26.960]  And SWIFT has become a dominant player offering a variety of services.
[12:26.960 --> 12:35.760]  And as it became dominant, it became more useful for governments to use to accomplish their foreign policy goals.
[12:35.760 --> 12:50.860]  So in 2012, you see the EU enforcing sanctions on Iran by cutting off Iranian access to SWIFT.
[12:51.180 --> 12:59.260]  And this year you see the U.S. enforcing sanctions on Russia by cutting off access to SWIFT.
[12:59.260 --> 13:14.640]  There's clearly a little bit of institutional anxiety on the part of those administering the SWIFT system, because there are pains to point out on their website that they consider themselves to be a neutral system and to be a utility.
[13:15.060 --> 13:22.480]  But they are also subject to these kinds of manipulation for foreign policy goals of nation states.
[13:25.370 --> 13:43.430]  So we can see that in the context of digitization, in the context of vastly increased flows of international funds, the government's greed for financial data is only growing.
[13:43.930 --> 13:51.210]  And as part of that, the neutrality of payment systems is under threat.
[13:52.790 --> 13:59.970]  Governments want to control the flow of payments, and they want to understand the nature of payments.
[14:00.330 --> 14:21.730]  And in my view, largely mistakenly, we are retreating from the idea that these payment systems could be used neutrally for anything that is not massively criminal to a situation where payment systems are more manipulable.
[14:21.890 --> 14:36.190]  As a response, we can see the U.S. government becoming more aggressive in the area of cryptocurrency tracking and regulation.
[14:38.730 --> 15:02.290]  Over the last few years, I think it's fair to say that the U.S. government has become the most sophisticated actor in the world, in terms of tracking transactions, unraveling mixers, tracing cryptocurrency transactions, obviously more easily with Bitcoin than with more privacy oriented coins.
[15:04.050 --> 15:16.230]  And there's also been a lot more thinking about how to integrate cryptocurrencies into the worldwide financial system, rather than having them exist apart from them.
[15:16.390 --> 15:21.390]  And there's clearly a great deal of regulatory discomfort with that separate existence.
[15:22.830 --> 15:28.550]  To explain a little bit about mixers, because not everyone here is going to be terribly familiar with what they do.
[15:28.550 --> 15:37.210]  But if you take Bitcoin as the default, because it was the first cryptocurrency, then user A sends a Bitcoin to user B.
[15:37.430 --> 15:42.710]  That transaction is recorded, it's on the public blockchain, it's visible.
[15:44.210 --> 15:59.930]  If you use a mixer service, then that mixes your cryptocurrency payment with cryptocurrency from other users, and sends that mix to one or more addresses that are designated by user A.
[16:00.230 --> 16:10.010]  That mixing process breaks the on-chain link between wallet addresses, and that improves user privacy and autonomy.
[16:10.430 --> 16:19.210]  The mixer then gives back to user A, or onward to user B, an equivalent value of the resulting mix of coins.
[16:19.710 --> 16:25.450]  So user A or user B, they don't have to know the source of their new assortment of coins.
[16:25.970 --> 16:29.610]  Just that it has the equivalent value of what was put in.
[16:31.270 --> 16:34.590]  Subtracting, presumably, some fee for the use of the mixing service.
[16:34.590 --> 16:54.630]  So the U.S. government has begun prosecution of peer-to-peer cryptocurrency traders for not fulfilling KYC requirements, not filing the suspicious activity reports that you're supposed to file for transactions of a value of over $10,000.
[16:54.630 --> 16:57.810]  The first prosecution for that was in 2019.
[16:58.230 --> 17:17.130]  And they have also started to contract with third-party vendors who specialize in cryptocurrency tracing, of which a big player is Chainalysis.
[17:18.830 --> 17:22.150]  And the kinds of things that Chainalysis do are this.
[17:22.350 --> 17:38.290]  So when you have coins from two or more addresses that are spent in a single transaction, then the software reveals that whoever created that multi-input transaction must have control of both spender addresses.
[17:38.290 --> 17:48.550]  So that now allows Chainalysis to identify a single identity governing those transactions and to identify that to their client.
[17:48.810 --> 17:52.290]  In other cases, they can follow what's called appeal chains.
[17:52.610 --> 18:05.890]  So Bitcoins or other cryptocurrencies get moved out of one address, a fraction is paid to a recipient, then the remainder is returned to a spender at a different address, a change address.
[18:05.890 --> 18:19.510]  And Chainalysis' software enables them to distinguish the chain addresses, and that allows investigators to follow a sum of money as it hops from one address to the next.
[18:19.890 --> 18:27.190]  So FBI is developing significant expertise in this, so is the IRS, and so is ICE.
[18:28.570 --> 18:53.310]  And they seem to have been starting to have substantial contracts with Chainalysis, and a developing relationship with Coinbase to track cryptocurrency transactions, which I presume are related to them attempting to suppress cryptocurrency payments to Coyotes smuggling people over the border.
[18:54.570 --> 19:09.650]  So the Biden administration attempted to introduce a rule last year that would not require reporting of all transactions over a value of $10,000, but over a value of $600, which would be a lot more intrusive.
[19:09.770 --> 19:15.010]  And we were working on congressional advocacy to oppose that move.
[19:16.590 --> 19:19.250]  In the end, the Senate Finance Committee nixed it.
[19:21.250 --> 19:34.490]  And what followed was an executive order with some really interesting phraseology for how they're thinking about cryptocurrency and payment surveillance more broadly.
[19:34.650 --> 19:35.970]  So I'm just going to read a little bit of that.
[19:35.970 --> 19:54.870]  They say, the executive order says, digital assets may pose significant illicit finance risks, including money laundering, cybercrime, and ransomware, narcotics and human trafficking, and terrorism and proliferation financing, assumedly nuclear proliferation.
[19:55.230 --> 20:05.270]  Digital assets may also be used as a tool to circumvent United States and foreign financial sanctions regimes and other tools and authorities.
[20:05.510 --> 20:07.150]  And we'll talk about sanctions in a moment.
[20:07.910 --> 20:10.720]  Growth in decentralized financial ecosystems.
[20:11.110 --> 20:12.470]  This is the DeFi stuff.
[20:12.810 --> 20:24.630]  Peer to peer payment activity and obscured blockchain ledgers without controls to mitigate illicit finance could also present additional market and national security risks in the future.
[20:25.690 --> 20:26.850]  And they're right.
[20:27.110 --> 20:30.550]  Opinions differ on how much of a problem that is, but they are right.
[20:31.430 --> 20:43.850]  They're now contemplating the urgent adoption of a central bank digital currency, which is another way of co-opting the cryptocurrency space and bringing it into the mainstream.
[20:45.870 --> 20:54.870]  A lot of this comes, I think, from talking with staffers from the kind of impulse that I saw commonly with people when I was at public policy school.
[20:54.870 --> 21:01.830]  For public policy people, they detest the idea of biased and prejudiced decision making.
[21:02.210 --> 21:10.970]  And the conception, at least when I was at policy school, was that the way that you avoided bias in decision making was to collect more data.
[21:10.970 --> 21:20.770]  And therefore, implicitly, more collection of data by the government, by improving decision making, is by default a good.
[21:21.090 --> 21:31.870]  And it's very hard for public policy people to wrap their minds often around situations where the collection of less data may be a good.
[21:31.870 --> 21:36.930]  That's just not how public policy courses and philosophy is structured.
[21:37.450 --> 21:47.250]  So we have data now flowing from cryptocurrency exchanges to FinCEN and from FinCEN outward to ICE and FBI and IRS.
[21:48.910 --> 22:09.090]  And this, I want to emphasize, this has gotten a lot deeper and a lot more sophisticated in between, say, 2017 and now, to the extent that even with the impressive progress that there has been on privacy coins like Monero and Zcash, in the context of this heightened scrutiny,
[22:09.670 --> 22:25.190]  relying only on the technology of those privacy coins feels unwise, especially for implementations that the U.S. government may perceive as being against its interests, whether those implementations are legal or illegal in a given country.
[22:26.090 --> 22:41.670]  So, this raises an interesting question of whether cryptocurrency can, in fact, blunt the impact of sanctions regimes.
[22:41.670 --> 22:50.830]  And with that, how much can it blunt the efforts of the U.S. to advance its national interest?
[22:51.030 --> 22:53.190]  We're getting into some very large questions here.
[22:53.390 --> 22:58.170]  And you can see the anxiety about that in the executive order.
[22:58.350 --> 23:02.050]  So how far is that really true as we stand?
[23:02.050 --> 23:20.850]  Well, what I see realistically right now is that implementations outside the U.S. that are citizen-focused are blunting the impact of sanctions on individuals.
[23:21.330 --> 23:28.750]  That's not exactly where the anxiety lies, but that is nevertheless the case.
[23:28.750 --> 23:31.930]  So there are some useful examples of this.
[23:34.050 --> 23:52.830]  In Venezuela, for people who have been looking to flee Venezuela, in the context of the currency controls that the Venezuelan government imposed, cryptocurrency has been a useful store of value, enabling them to flee the country and still take something with them.
[23:54.390 --> 24:16.850]  In Afghanistan, with the acute crisis that is going on there, there are educational charities that are reported to be turning to cryptocurrency so that they can continue to provide some measure of girls' education without using anything that is visible to the Taliban,
[24:17.610 --> 24:26.290]  but also without having to raise funds in ways that go through the mainstream banking system, which is operating under sanctions.
[24:27.130 --> 24:33.510]  And also, as things get more desperate there, to provide famine relief as well as education.
[24:33.510 --> 24:49.570]  I have seen reports that Iranian students are using cryptocurrency to be able to pay college tuition for remote learning courses, which would otherwise come under sanctions.
[24:50.990 --> 25:04.250]  The feminist coalition in Nigeria got blocked from raising funds by the government, because it advocated too energetically against police brutality in Nigeria.
[25:04.770 --> 25:12.530]  And they have been using cryptocurrency to continue their work against police brutality and against impunity from rape.
[25:14.610 --> 25:27.050]  And another interesting example I found was the Belarus Solidarity Foundation, which is an association of dissidents against the Belarusian dictator Lukashenko.
[25:28.430 --> 25:31.510]  Again, blocked from raising funds by their government.
[25:31.770 --> 25:47.030]  They've used cryptocurrency and continue to use cryptocurrency to fund that dissent, and also now to fund volunteers and medical supplies and equipment in the form of arms to resist the Russian invasion of Ukraine.
[25:49.690 --> 25:53.770]  So, let's think about the larger anxiety in this executive order.
[25:55.730 --> 26:13.350]  Why is it that we have not seen, as a consequence of the Russian invasion of Ukraine, a substantial turn by the Russian government to using either cryptocurrency more broadly, or privacy coins in particular, to evade sanction regimes?
[26:15.170 --> 26:19.630]  There are a few reasons why that might be so.
[26:21.770 --> 26:34.170]  So, one is probably that this whole Ukrainian invasion was envisioned as being a short-term, over-by-Christmas kind of thing.
[26:34.450 --> 26:43.490]  It was, I think, envisioned as an easy security operation and that the conquest of Ukraine would be brief.
[26:43.490 --> 26:54.450]  And that logically means that they would not necessarily have been thinking about long-term financial retooling of the tools that they were using.
[26:55.710 --> 26:58.750]  There's obviously issues of expertise.
[26:58.750 --> 27:09.570]  I would be surprised if a substantial portion of Russian leadership were familiar with the use of privacy coins.
[27:10.710 --> 27:13.250]  But there are also issues of scale.
[27:14.390 --> 27:15.870]  Wars are massively expensive.
[27:16.190 --> 27:26.330]  And the daily transaction volume on Monero, which is the largest of the privacy coins by some way, is a tiny fraction of the expenses of a war.
[27:26.890 --> 27:36.010]  So, we would be able to see a Russian-caused expansion in the use of privacy coins that just is not there.
[27:36.010 --> 27:51.430]  And that issue of volume suggests that the anxiety in the executive order that nation states would use privacy coins and cryptocurrency to blunt the impact of sanctions.
[27:51.530 --> 28:02.430]  That really is not happening yet and is not going to happen until adoption of privacy coins is a lot broader than it is today.
[28:06.830 --> 28:08.270]  So, there you go.
[28:08.510 --> 28:09.610]  There is good and bad.
[28:09.990 --> 28:25.110]  So, now comes the part of the talk where I get to be a little bit of a Nostradamus and to give a plausible scenario for the near-term future for payment system surveillance.
[28:25.110 --> 28:31.890]  And there are some things that are reasonably foreseeable, some of which are already in part happening.
[28:32.530 --> 28:43.870]  So, in the context of privacy coins, some degree of deplatforming from exchanges has already happened.
[28:43.870 --> 28:53.170]  And in some countries, there will be attempts to criminalize the use of privacy coin related software.
[28:54.990 --> 29:07.490]  We can expect to see more countries experimenting like India has done and like China has done and like Sweden has done with discouraging the use of cash.
[29:07.490 --> 29:15.030]  Cash is too flexible and too anonymous for the default assumptions of governments these days.
[29:15.790 --> 29:22.790]  An enormous amount of the world's payments transactions are still conducted in cash.
[29:22.930 --> 29:25.250]  Even in the U.S., it's still around 50%.
[29:26.650 --> 29:34.550]  And we can expect to see that continue to decrease in an environment of government discouragement of cash.
[29:34.550 --> 29:53.150]  One thing that gives privacy and surveillance activists hives is the prospect of increased mergers between credit rating agencies and data brokers and open source intelligence providers.
[29:53.330 --> 30:01.990]  A vastly increased volume of data going into credit rating decisions, whether that data is of high quality or low quality.
[30:01.990 --> 30:15.250]  And forming what you might call credit broker entities that pose a significant threat to people's privacy in the payments context.
[30:16.310 --> 30:28.830]  On another axis, we can see that Facebook already spent a couple of years trying to create its own cryptocurrency, Lumen.
[30:30.670 --> 30:39.930]  And was clearly prompted in that by the success of the WeChat, WePay app access in China.
[30:40.310 --> 30:45.550]  And we can expect to see continued efforts along those lines.
[30:45.790 --> 30:51.510]  And in the West, it may be that eventually those efforts will be successful.
[30:52.650 --> 31:10.670]  So if those consolidations occur, then we can reasonably foresee that governments will have an enormously strong incentive to coordinate with credit brokers and WeChat analogs to do all the things that they already do with other types of surveillance data.
[31:11.530 --> 31:14.350]  We're about to consider, we'll do...
[31:14.350 --> 31:19.510]  We're looking for future banks to write some banks, particularly close events later and Approxedposts fields are more people who are used to consider the...
[31:19.510 --> 31:22.730]  And some of those prosecutions will be completely legitimate.
[31:23.750 --> 31:27.490]  Some of the concerns relating to payment surveillance surveillance are completely legitimate.
[31:27.490 --> 31:37.590]  But there's also going to be a lot of fallout for individuals' privacy that comes along with that.
[31:39.070 --> 31:52.030]  And it is hard to see what institutional or legal barriers there may be within the U.S. context that would prevent the U.S. government from going down that particular path.
[31:54.050 --> 32:09.930]  So, then I can switch because it is my talk and I get to do this kind of thing from being Nostradamus to being Moses and making not the commandments but some suggestions of things that we can do that may help a little bit.
[32:10.090 --> 32:13.110]  I'm not sure, really, what will help very much.
[32:13.250 --> 32:16.550]  These are powerful forces that are involved here.
[32:16.550 --> 32:29.930]  But one element of this can be that the smaller banks and the credit unions in the U.S. are not geared up with the SWIFT system.
[32:30.270 --> 32:37.690]  And so, for folks who are privacy conscious, there can be small banks and credit unions that may be preferable to large ones.
[32:37.870 --> 32:40.370]  We use one called Digital Federal Credit Union.
[32:42.210 --> 32:47.110]  The privacy coin adoption and volume problem.
[32:47.750 --> 32:52.510]  Solving that would solve a large number of other problems.
[32:52.690 --> 32:54.030]  It would solve problems of volatility.
[32:54.030 --> 33:03.950]  It would solve problems of how you get resources out of the privacy coin context and into contexts where normal people transact.
[33:05.110 --> 33:13.550]  In ways that may be less transparent to governments than the regular banking system is.
[33:14.570 --> 33:48.490]  There's been a great deal of research that there isn't really time to get into in the cryptocurrency space over identity solutions and what is sometimes called sovereign identity, but having instead of a unified digital identity, separate identity claims in separate contexts that by balkanizing your digital identity enhance your privacy vis-a-vis the government.
[33:49.170 --> 33:53.230]  There have been long-running experiments with autonomous currencies.
[33:53.230 --> 34:02.010]  There's one near me in Massachusetts, which is Berkshires, which has been popular for a long time in a particular county in Massachusetts.
[34:02.370 --> 34:04.790]  And that's a local physical currency.
[34:09.110 --> 34:27.390]  For anarchist groups, there have been interesting experiments on a smaller scale with, you know, black market work and barter economies and free cycling and mutual aid that existed and have always existed outside of the regular banking system.
[34:28.350 --> 34:53.950]  And one thing that might be useful and interesting for you folks as a takeaway from this is to practice setting up an unhosted privacy coin wallet while it's legal to do so and to try transacting with it and see where it takes you and what kind of implications that generates in your mind for this kind of problem and how it may be solved.
[34:54.390 --> 35:01.810]  So those are the preliminary thoughts that I have for you on the topic of payment surveillance.
[35:01.810 --> 35:13.790]  I think it's a really fascinating area and that it's going to become something that, as activists, we have to think about more and devote more time and thought to.
[35:14.190 --> 35:17.630]  But I'm going to open it up at this point for Q&A.
[35:17.850 --> 35:20.190]  And thank you for being patient and for listening.
[35:27.610 --> 35:34.990]  So if you want to come to the mic over in that direction, then I'd welcome any thoughts that you have.
[35:38.940 --> 35:39.650]  You're first.
[35:39.860 --> 35:40.090]  You're up.
[35:40.170 --> 35:40.550]  It's you.
[35:41.070 --> 35:43.110]  Thank you for an awesome, super informative talk.
[35:43.520 --> 35:52.860]  I had a question about the slide you put up about the contracts with ICE and with the government, right?
[35:52.980 --> 35:55.360]  So Coinbase and Coinalysis and a few other folks.
[35:56.460 --> 35:56.900]  Yes.
[35:57.110 --> 35:58.840]  Is that dollars or is that thousands of dollars?
[35:58.960 --> 36:01.230]  Because those numbers look smaller than I would have expected.
[36:02.670 --> 36:03.070]  Hmm.
[36:03.070 --> 36:07.690]  And my understanding is that those are thousands of dollars.
[36:07.940 --> 36:10.000]  So I should have made that clear.
[36:10.360 --> 36:11.750]  Okay, so these are billions, not...
[36:11.750 --> 36:11.840]  Yes.
[36:11.840 --> 36:12.170]  Okay, yeah.
[36:12.280 --> 36:13.000]  That makes more sense.
[36:13.000 --> 36:13.130]  I'm sorry.
[36:14.690 --> 36:19.420]  I can feel my math teacher cringing at me for not labeling axes properly.
[36:19.730 --> 36:20.730]  But there you go.
[36:20.920 --> 36:21.480]  Thank you very much.
[36:26.240 --> 36:27.140]  I have a question.
[36:27.240 --> 36:27.560]  Can we go?
[36:28.160 --> 36:28.840]  Yes, please.
[36:29.180 --> 36:29.760]  How are you doing?
[36:29.760 --> 36:31.440]  I met you yesterday at your booth.
[36:31.660 --> 36:31.680]  Yes.
[36:31.680 --> 36:42.580]  So what you're saying is if the government start banning the privacy coins, of course, they're going to force the exchanges to remove the coins from their systems, right?
[36:42.740 --> 36:44.020]  So what happens?
[36:44.120 --> 36:44.780]  What do you think is going to happen?
[36:44.900 --> 36:48.120]  Is it just going to go to, like, decentralized exchanges at that point?
[36:48.280 --> 36:50.860]  Or, I mean, it could continue going on.
[36:50.980 --> 36:54.980]  It's just going to get harder for probably regular people to understand how to trade.
[36:54.980 --> 36:55.480]  Yeah.
[36:55.740 --> 37:06.280]  I mean, it's not a process, I think, where governments are expecting that there is going to be zero percent usage of privacy coins in the future.
[37:06.300 --> 37:16.540]  But I think it's something that they want to discourage and denormalize and drive out of anything that is at all analogous to something that is usable.
[37:17.680 --> 37:22.280]  And so it's an awkward discussion.
[37:22.280 --> 37:23.900]  And I've been in some of these discussions.
[37:24.300 --> 37:31.540]  And you have folks who understand the potential of privacy coins who are saying, you know, look, you don't understand.
[37:31.540 --> 37:38.920]  It's not about trying to regulate this particular kind of coin or this particular kind of software, because it is designed to make you irrelevant.
[37:41.000 --> 37:51.680]  And on the other side, you have a lot of interest from governments in the potential that cryptocurrency poses as long as it can be adequately taxed and monitored.
[37:57.760 --> 38:09.360]  And I think both elements of these folks are right in a way, but you can have very innovative software that is very privacy friendly that still nobody will use.
[38:09.580 --> 38:18.280]  If governments decide to just make it illegal within the spaces of government, then that will discourage people.
[38:18.440 --> 38:27.260]  If it is perceived as being something that only criminals will use, then it will discourage people from using it.
[38:27.260 --> 38:41.800]  And so there are a lot of things that governments, I think, will be willing to do to maintain their grip over how people transact and to make that continually more transparent to them.
[38:41.940 --> 38:45.140]  This is a very important thing to governments to do.
[38:45.340 --> 38:45.900]  Thank you.
[38:47.940 --> 38:52.720]  I think most of us here believe in the individual's right to privacy.
[38:52.720 --> 39:02.600]  But the sad truth of a lot of anonymous currencies, you know, I don't want to name any, is that they are used disproportionately by bad actors.
[39:03.000 --> 39:07.820]  So I wonder, you know, in your various positions, how do you counter this argument?
[39:09.900 --> 39:43.600]  Well, so I think that speaking a little bit to the dynamic I was just describing, the more that governments try to repress and discipline a particular technology, the more it will be likely to be used only by people who have, let's say, a really strong financial incentive to keep their affairs out of government eyes.
[39:43.600 --> 39:56.660]  I've given some very favourable examples of people who might have good reason to use privacy coins.
[39:57.700 --> 40:11.040]  But it is nonetheless true that there are child sexual abuse materials that are circulated using these payments.
[40:11.040 --> 40:13.740]  There is money laundering that happens.
[40:13.980 --> 40:17.420]  There is tax evasion that happens using these tools.
[40:17.720 --> 40:30.360]  But at present, I would have to say that, at least as regards tax evasion and money laundering, an enormous volume of that occurs through the regular banking system.
[40:30.880 --> 40:40.820]  And it occurs because you have corrupt individuals who are working within banks who enable it to happen on behalf of wealthy clients.
[40:41.540 --> 40:53.360]  And so I understand the need for there to be some notion of knowing your customer.
[40:53.680 --> 41:08.860]  I understand the impulse behind it, but I also see a much more ardent desire by governments to squash these particular technologies than to clean house in the established banking system.
[41:08.980 --> 41:10.440]  They're easy targets now.
[41:10.700 --> 41:11.000]  Yes.
[41:11.360 --> 41:12.840]  You know, it's nascent.
[41:12.980 --> 41:17.380]  And I think they feel like they've done all they can in the fiat side of things.
[41:18.280 --> 41:24.540]  I'm sure they do feel that, or at least they feel they have done all that they are willing to do.
[41:24.540 --> 41:25.380]  Thank you.
[41:27.880 --> 41:29.040]  Thanks for the talk.
[41:29.300 --> 41:31.120]  I'll keep myself to one question.
[41:31.900 --> 41:39.720]  So, we do have nowadays a lot of people, a lot of consumers who have moved away from cash.
[41:39.920 --> 41:55.160]  And even though cash has a lot of benefits for personal freedom, they adopt the corporate-run payment systems that are sometimes credit cards, sometimes...
[41:55.160 --> 41:56.000]  I use them, too.
[41:56.340 --> 41:56.700]  Yeah, right.
[41:57.000 --> 41:58.180]  So, a lot of people use them.
[41:58.580 --> 42:03.720]  And data brokers and so on have a lot of visibility to what happens in them.
[42:06.640 --> 42:13.500]  So, you'd expect that to result in costs to consumers, although consumers are usually not aware of the costs.
[42:13.500 --> 42:25.700]  It seems to me that we are seeing those costs, but it's being attributed to anything but the recent adoption of these corporate surveillance payment systems.
[42:26.220 --> 42:29.600]  So, I mean, everybody's suffering with inflation.
[42:29.880 --> 42:35.420]  Nobody connects that to the rise of corporate surveillance payment systems.
[42:35.660 --> 42:37.740]  I wonder if you see any link there.
[42:40.080 --> 42:50.260]  So, I do not feel qualified to speak on the link between inflation and these phenomena.
[42:50.660 --> 42:52.680]  I am not a trained economist.
[42:52.680 --> 43:12.720]  But, I would say that it is true that it is hard to see the damage from poor privacy practices and poor information security practices.
[43:13.100 --> 43:18.180]  And that it can be shocking for people to come from other countries to the U.S.
[43:18.300 --> 43:24.200]  and see just the regular process of credit card transactions and go, like, this is crazy.
[43:24.200 --> 43:26.020]  You're not entering a PIN.
[43:26.300 --> 43:27.120]  You're not...
[43:27.120 --> 43:29.200]  Nobody's checking a signature.
[43:30.480 --> 43:34.560]  Nobody is checking that the person who has the card is actually that person.
[43:34.900 --> 43:49.500]  This is an apparatus that is designed absolutely for the convenience of the merchants and very little to do with protecting the consumer against credit card fraud.
[43:49.500 --> 43:56.080]  So, people have great reasons to be skeptical of the current ways that we handle things.
[44:04.790 --> 44:15.670]  You laid out very nicely that cryptocurrencies don't play a role in sanction bustings for, let's say, Russia or for China or for Iran as a state actor.
[44:16.750 --> 44:24.690]  Why is it then... and cryptocurrencies are used, as you showed, with great success for people subverting other states.
[44:25.230 --> 44:26.970]  Why is it then that the U.S.
[44:27.090 --> 44:40.290]  has such a hard-on, let's say, to actually regulate cryptocurrencies when they're actually being used very successful for, let's say, liberal uses instead of suppressive uses?
[44:40.290 --> 44:56.160]  I think... I think that there is a... a real tension of world views that I can encounter in these spaces.
[44:57.640 --> 45:13.160]  And when you're talking to, like, staffers on the Finance Committee in Congress or folks like this, then it is about there being data that is out there that they can gather that they are not gathering.
[45:13.160 --> 45:25.560]  It is about there being problems that they could potentially solve if they allow the government to gather this information that they are feeling like they cannot solve adequately without that.
[45:26.080 --> 45:41.100]  And so it is a worry about their scope of authority that I think is such a powerful and fundamental thing for folks who have this kind of training that they might not even articulate it.
[45:41.160 --> 45:47.660]  And I don't know even if I would have come to articulate it if I hadn't wended my way over into the privacy and surveillance space.
[45:50.780 --> 46:06.560]  So I don't think that there is much that will stop governmental employees from feeling that there is a problem here in the development of the cryptocurrency space.
[46:06.740 --> 46:18.200]  It's often the case, honestly, that government departments are victims of ransomware attacks that are executed with the aid of cryptocurrency technology.
[46:19.160 --> 46:27.540]  And that often is because government departments are poorly protected and have visible information security practices.
[46:29.180 --> 46:33.500]  And so they are ripe for the plucking.
[46:34.080 --> 46:38.260]  But that doesn't mean they like the sensation of being plucked.
[46:39.740 --> 46:43.260]  I think to your question is... I'm sorry to interrupt.
[46:43.480 --> 46:52.040]  But in the U.S., I think the governments have a lot of pressure from the banks, which is controlled by Federal Reserve, to crack down on this stuff.
[46:52.060 --> 46:55.700]  Because in the long run, cryptocurrencies are a threat to the U.S.
[46:55.800 --> 46:56.020]  dollar.
[46:56.400 --> 47:01.040]  That's why I think, personally, having this pressure, not too much about that.
[47:01.840 --> 47:05.000]  Yeah, on your Moses slide, you mentioned sovereign identity.
[47:05.460 --> 47:07.500]  Are there any concrete examples of that?
[47:08.520 --> 47:09.960]  Well, there is.
[47:10.220 --> 47:12.060]  You can look up...
[47:12.060 --> 47:17.240]  The one that I looked into most closely are some folks called the Sovereign Foundation.
[47:17.600 --> 47:19.960]  S-O-V-R-I-N.
[47:19.960 --> 47:24.940]  And they've been doing a lot of thinking about the...
[47:24.940 --> 47:31.300]  How you deal with what I characterize as the problem of blockchain and identity persistence.
[47:33.040 --> 47:42.380]  Because, in a sense, we all benefit from a certain plasticity in our identities.
[47:42.380 --> 47:47.020]  Being able to shift our self-conceptions over time.
[47:47.420 --> 47:54.420]  Being able to shift ways that we name ourselves and describe ourselves to the world.
[47:54.780 --> 48:00.580]  And not having a fully accurate digital record of the decisions that we have made.
[48:02.860 --> 48:12.540]  One of the risks in the blockchain space is because of the indelible nature of transactions on the blockchain.
[48:12.540 --> 48:37.280]  If there are solutions adopted unwisely that are blockchain solutions that fix a particular digital identity at a particular point in time for a person, then that person will be accountable to that identity for as long as that blockchain is accessible.
[48:37.280 --> 48:46.680]  I've seen some absolutely cracked suggestions of applying blockchain solutions in the criminal justice space in the U.S.
[48:46.680 --> 48:50.800]  And I'm like, for Christ's sake, don't touch the one with the other.
[48:50.920 --> 48:53.300]  They should stay very, very far away from one another.
[48:55.560 --> 49:22.200]  So, my hope is that if there are methods evolved for, as I put it, balkanizing your digital identity and having it break up into particular claims in particular contexts, then it will decrease the risk to people's self-characterization of the existence of blockchain technology.
[49:23.540 --> 49:26.800]  And I'm sorry if that got a little abstruse and hypothetical.
[49:27.200 --> 49:28.800]  But that's been on my mind.
[49:32.410 --> 49:32.850]  Okay.
[49:33.570 --> 49:34.550]  Looks like we're done.
[49:56.990 --> 49:57.430]  Hello.
[49:58.090 --> 49:58.490]  Hi, guys.
[49:58.790 --> 50:05.710]  So, just to let you know, closing ceremonies will happen on 416, but also there will be broadcasts here, as far as I know, correct?
[50:06.310 --> 50:06.750]  No?
[50:06.750 --> 50:06.830]  No?
[50:07.650 --> 50:07.710]  Okay.
[50:11.990 --> 50:12.490]  216?
[50:13.270 --> 50:13.770]  Yeah.
[50:14.430 --> 50:14.610]  Okay.
[50:14.870 --> 50:15.510]  So, yeah.
[50:15.650 --> 50:16.390]  206, I think.
[50:16.790 --> 50:21.330]  206 or 416, those are the places to go to watch the closing ceremonies.
[50:21.790 --> 50:22.470]  Thank you.
[50:22.470 --> 50:22.550]  Thank you.