In his desperation for campaign cash, Trump is courting crypto bros by promising that he will be nice to them when he becomes President. Last week, he spoke at a conference for Bitcoin enthusiasts and pretended to know what Bitcoin is and how it works. — Read the rest
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Argentine authorities are working with El Salvador, a pioneering nation in bitcoin adoption, aiming to boost cryptocurrency adoption in Argentina.
High-ranking officials from Argentina's National Securities Commission (CNV), the country's securities regulator, met with El Salvador's National Commission of Digital Assets on May 23 to discuss the use of cryptocurrencies, according to an official announcement by the CNV. The talks focused on El Salvador's experience in adopting bitcoin and its regulatory framework.
"El Salvador has emerged as one of the leading countries, not only in the use of bitcoin, but it has also stood out in the world of crypto assets. It has created a specific commission, the National Commission of Digital Assets (CNAD), and therefore has an experience that is very valuable for the CNV at this time," said Roberto E. Silva, president of the CNV.
Under President Nayib Bukele, El Salvador made history by becoming the first country to adopt bitcoin as legal tender in September 2021, using it alongside the U.S. dollar. At the same time, the country launched Chivo Wallet, a government-backed digital wallet, and gave $30 worth of bitcoin to citizens who signed up for it.
Since then, El Salvador has embarked on several ambitious projects to promote bitcoin use, including creating a bitcoin city powered by geothermal energy, issuing bitcoin bonds, and offering expedited citizenship to bitcoin investors.
To date, the country has mined 474 bitcoin and holds 5,756 bitcoin, valued at just under $400 million, according to a website that tracks El Salvador's bitcoin portfolio. Bukele has said he plans to keep growing El Salvador's holdings by buying one bitcoin every day.
In recent years, Argentina has also seen a surge in cryptocurrency adoption as its citizens seek refuge from the peso's depreciation and soaring inflation. And since Javier Milei became president of Argentina last year, the crypto sector has seen positive developments. Just a month after Milei took office, Minister of Foreign Affairs Diana Mondino legalized the use of bitcoin for settling contracts.
"We want to strengthen ties with the Republic of El Salvador, and therefore, we are going to explore the possibility of signing collaboration agreements with them," Silva said about the recent meeting. The meeting follows a visit in March by CNV Vice President Patricia Boedo to El Salvador to discuss regulatory issues, indicating the interest of both countries in reaching some kind of agreement on crypto assets.
News of this collaboration between the two countries sent ripples through the crypto market, pushing bitcoin's value past the $70,000 mark. A formal partnership between Argentina and El Salvador could signal a major shift in Latin America's approach to digital assets, paving the way for broader crypto adoption.
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The Department of Justice indicted the creators of an application that helps people spend their bitcoins anonymously. They're accused of "conspiracy to commit money laundering." Why "conspiracy to commit" as opposed to just "money laundering"?
Because they didn't hold anyone else's money or do anything illegal with it. They provided a privacy tool that may have enabled other people to do illegal things with their bitcoin. But that's not a crime, just as selling someone a kitchen knife isn't a crime. The case against the creators of Samourai Wallet is an assault on our civil liberties and First Amendment rights.
What this tool does is offer what's known as a "coinjoin," a method for anonymizing bitcoin transactions by mixing them with other transactions, as the project's founder, Keonne Rodriguez, explained to Reason in 2022:
"I think the best analogy for it is like smelting gold," he said. "You take your Bitcoin, you add it into [the conjoin protocol] Whirlpool, and Whirlpool smelts it into new pieces that are not associated to the original piece."
Smelting bars of gold would make it harder for the government to track. But if someone eventually uses a piece of that gold for an illegal purchase, should the creator of the smelting furnace go to prison? This is what the government is arguing.
Cash is the payment technology used most by criminals, but it also happens to be essential for preserving the financial privacy of law-abiding citizens, as Human Rights Foundation chief strategy officer Alex Gladstein told Reason:
"The ATM model, it gives people the option to have freedom money," says Gladstein. "Yes, the government will know all the ins and outs of what flows are coming in and out, but they won't know what you do with it when you leave. And that allows us to preserve the privacy of cash, which I think is essential for a democratic society."
The government's decision to indict Rodriguez and his partner William Lonergan Hill is also an attack on free speech because all they did was write open-source code and make it widely available.
"It is an issue of a chilling effect on free speech," attorney Jerry Brito, who heads up the cryptocurrency nonprofit Coin Center, told Reason after the U.S. Treasury went after the creators of another piece of anonymizing software. "So, basically, anybody who is in any way associated with this tool…a neutral tool that can be used for good or for ill, these people are now being basically deplatformed."
Are we willing to trade away our constitutional rights for the promise of security? For many in power, there seems to be no limit to what they want us to trade away.
In the '90s, the FBI tried to ban online encryption because criminals and terrorists might use it to have secret conversations. Had they succeeded, there would be no internet privacy. E-commerce, which relies on securely sending credit card information, might never have existed.
Today, Elizabeth Warren mobilizes her "anti-crypto army" to take down bitcoin by exaggerating its utility to Hamas. The Biden administration tried to permanently record all transactions over $600, and Warren hopes to implement a Central Bank Digital Currency, which would allow the government near-total surveillance of our financial lives.
Remember when the Canadian government ordered banks to freeze money headed to the trucker protests? Central Bank Digital Currencies would make such efforts far easier.
"We come from first principles here in the global struggle for human rights," says Gladstein. "The most important thing is that it's confiscation resistant and censorship resistant and parallel, and can be done outside of the government's control."
The most important thing about bitcoin, and money like it, isn't its price. It's the check it places on the government's ability to devalue, censor, and surviel our money. Creators of open-source tools like Samourai Wallet should be celebrated, not threatened with a quarter-century in a federal prison.
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On April 24, the Department of Justice continued its assault on open source developers, arresting Keonne Rodriguez and William Lonergan Hill on allegations of money laundering. Rodriguez and Hill, operating the well-known bitcoin application Samourai Wallet, committed the grand offense of writing code.
Under the auspices of money laundering, the DOJ seized servers located abroad, pulled the Samourai website from its domain, and had Google remove the app from its Play Store.
It's a stunning flashback to the 1990s "crypto wars," when the feds last went after cryptographers and others writing code.
At that time, government officials alleged that producing and sharing encryption technology amounted to exporting weapons. Politicians worried that these privacy technologies would fall into the "wrong" hands, so much so that President Bill Clinton declared a national emergency and then-Sen. Joe Biden (D–Del.) introduced a bill to allow the government to spy on text and voice communications.
Philip Zimmermann, a programmer, wrote an encryption software called Pretty Good Privacy (PGP) that would thwart the government's snooping efforts. As Paul Detrick explained for Reason, the software was so good that the DOJ launched a criminal investigation in 1993 "on the grounds that by publishing his software he had violated the Arms Export Control Act. To demonstrate that PGP was protected under the First Amendment, Zimmerman[n] got MIT Press to print out its source code in a book and sell it abroad."
The DOJ dropped the case.
Around the same time, Berkeley Ph.D. student Daniel Bernstein developed an encryption method called Snuffle based on a one-way hash function. After publishing an analysis and instructions on how to use his code, he reached out to the State Department to present it. Bad move. The State Department required Bernstein to "register as an arms dealer, and apply for a[n] export license merely to publish his work online." Berstein, represented by the Electronic Frontier Foundation, took the government to court, and ever since the landmark ruling in Bernstein v. U.S. Department of Justice, code has been considered speech.
Thirty years later, politicians are now worried less about technical data leaking to foreigners and more about those foreigners' money flows. In a supposed attempt to prevent terrorism, the government is cracking down on money laundering.
But the main impetus hasn't changed: Behavior not subject to the oversight of the U.S. government must be suspicious—and is probably illegal.
With roots in the cypherpunk ethos to which both Zimmermann and Bernstein belonged, bitcoin encompasses the "code is speech" verdict from the '90s. Bitcoin is a digital currency based on an elaborate system of cryptographically protected numbers, signed and validated by other numbers, all in the open. Bitcoin is math. Software that runs bitcoin wallets are strings of 1s and 0s; they are speech, and at no point do bitcoin transactions cease to be speech.
The main service for which Rodriguez and Hill's Samourai Wallet has run afoul with law enforcement is Whirlpool, a privacy-enhancing feature on a blockchain that's otherwise open and available for anyone to inspect. In the fiat system, my employer can't spy into my bank account or I into theirs (though the bank can, and anyone who successfully hacks the bank's record). A grocery store, car dealership, or insurance provider can't see how much funds I have, where they came from, or who might have spent them a few hops before they came to me. With bitcoin, that's all in the open—hence why services like Whirlpool are so important.
Whirlpool constructs a five-input, five-output transaction between an unknown number of people. Five units of similar-sized bitcoin go in and five come out to new addresses. This obfuscates the individual coins' history, and anybody observing flows on the publicly available blockchain can no longer know which of the five outputs belonged to which input.
In the DOJ's enlightened view, that now constitutes money laundering and a failure to register as a money transmitter, even though Samourai is a noncustodial wallet, where the "operators do not take custody of user funds and therefore are technically incapable to 'accept' deposits or 'execute' the transmission of funds," according to Bitcoin Magazine.
I sometimes get paid in bitcoin from various international clients and employers. I've used Whirlpool many times—and it's about as nefarious and shady as any good old cash transaction. I don't exactly want my employer to be able to find out where I spent my funds. I definitely don't want someone I send bitcoin to to know how much I carry in the specific wallet from which I was spending. This is all standard hygiene in a modern digital world; we leak wealth and spending information like crazy, and protecting some of that privacy is just prudent behavior.
Have there been terrorists or otherwise certified Bad People using Samourai's services? Probably, but that's too low of a bar to throw a legal fuss. It's a bad-faith argument, as Reason's Zach Weismuller writes: "They will point to bad people using these tools, just as they pointed out that Hamas raised some funds in various cryptocurrencies, without noting that a vast amount of money laundering happens with government-issued currency."
Terrorists and criminals use these services, officials say. OK, but they also, to a much larger extent, use the U.S. dollar. Maybe the DOJ should arrest Jerome Powell and confiscate the Federal Reserve's servers while they're at it. We don't go after high-end leather wallet manufacturers because some of their customers carry notes that may have once been involved in crimes. We don't inspect cash registers at gas stations for illicit dollars—and then go after the manufacturer of the cash register themselves.
That's what Rodriguez and Hill are: manufacturers. Using code, they created a program that others operate on their own phones and computers. At no point in the process did they take custody of users' funds—which is why all the DOJ acquired when arresting Rodriguez and Hill were servers and domains. No stash of laundered and illicit bitcoin sat in the basement of the alleged culprits.
Government protagonists always have seemingly good reasons—terrorism, trafficking, drugs, Bad People doing normal things—to intervene and sidestep people's rights.
Those of us who worry about government overreach always feared that the crypto wars of the 1990s might one day return. Last week, the DOJ revived that battle.
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