I wrote an article some time ago about the self-sovereignty of money with Bitcoin and other crypto assets. Related to that question is a question of financial privacy, which was one of the hallmark achievements of blockchain technology, and its application as the foundation of digital currencies.
In light of all of this, it’s worth acknowledging the recent news coming out of San Francisco:
Coinbase has been ordered to disclose the personal and financial details of 14,000 US based clients who have carried out crypto based transactions of more than $20,000 over the past several years to the IRS. Many critics and advocacy groups are calling this an egregious violation of the right to privacy, citing concerns over the scope of the court-order being too wide. It’s one thing to target specific individuals legitimately suspected of tax fraud; it’s quite another to request the personal information of thousands of individuals in a broad scope investigation aiming to find grounds to further investigate suspected incidents of tax evasion.
This news reminds of of two important lessons:
The American government is serious about it’s tax money and is fully prepared to walk the fine line of investigative practices turning into notable breaches of privacy.
The companies we use as an easy shortcut into the world of crypto are not immune to the jurisdiction of centralized authorities and should not be trusted as such.
As digital currencies, and the companies built upon them, become more mainstream, governments will continue to perk up and seek to control the outcome and use of the industry. While this certainly isn’t an altogether negative development, it will be interesting to see how the principles of financial sovereignty and privacy might slowly erode in the new regulatory environment.
Comments of questions? Leave them below!