Cryptocurrencies and legality

Author: Alexander R. Hufford

Cryptocurrencies as a broad topic are being discussed more and more these days, and create some interesting points for discussion. A great deal is expressed both for and against, but fundamentally a few themes stand out and are met with great frequency. So this article will attempt a general overview of that knotty theme, of all the various implications of the legality of crypto-currencies, what does it mean or imply, both for governments and for people. First we should begin by discussing crypto-currencies in general, and then later moving on to our specific situation at FairCoin.

To start, one of the more interesting things about crypto-currencies is their status, which could be amusingly described at the present time as one of a-legality. This in the sense that many of them are not officially legalized, but on the other hand neither are they illegalized. Therefore there is already a zone of indistinction around their use and reality. This can be threatening, but on the other hand exciting as this functions as a low-level method of political education. People are already moving past the idea that the State is the ultimate arbiter of what they can or cannot do; and the State, as an institution, is losing its recently established (historically speaking) monopoly of issuance and control of all financial accounting tools.   

Increasingly countries talk about regulating crypto-currencies, which already is not so extreme as banning them outright. This issue recently came up in the instance of South Korea, one of the largest markets for crypto-currencies, and official talk about banning exchanges and currencies caused quite a downturn in the larger crypto market (along with other various announcements in early January 2018). Yet in a short space of time 200,000 signatures were gathered to protest against the proposed ban, it emerged that many employees of the Finance ministry had sold crypto-coins shortly before the regulatory news was announced, and finally came the honest official observation that it was probably practically impossible to ban coin trading. A more prosaic and slow-moving system of regulation looks to be in the works.

Indeed, the country that has experimented the most in this direction, China, has also seen some of the most use of crypto-currencies, and has instituted very strict ID and other controls for exchanges, although unrecognized trading still continues through encrypted chat groups or brief personal meetings. A great deal of the traffic has gone to other nearby countries like South Korea. This raises some basic political questions: for instance to join Chinese exchanges, ID must be provided, but on the other hand these exchanges are almost inherently speculative. This would affect crypto-coins, but does not so much target the uses desired for FairCoin specifically-it is not for buying and selling on a digital exchange and taking away money, it is for use in practical, real, fair and beneficial economic projects and transactions. 

As well, if for the present time many European states are not willing to imitate the extreme levels of Chinese control for various political and cultural reasons, many other countries are simply not capable to expend the vast amount of effort and expertise to regulate crypto-currencies. Thus the question of legality or illegality raises some interesting functional limits-not every state is strong, determined and wealthy enough to ban or even strongly canalize this traffic even if they wanted to. This also results from the basic reality that it is very hard to completely ban decentralized networks. There is indeed a sort of political tendency in the present time, that crypto-currency appears in destabilized places where the state is not so strong: Venezuela, Zimbabwe, Ukraine and Syria are all contemporary examples of this objective trend. Weak states do not have the actual capacity at all to regulate, much less ban, crypto-currencies.

There are also two issues to keep in mind: many of the wealthy parts of many different societies around the world, have made small fortunes speculating in various crypto currencies, and thus the crypto-world functions as a sort of unregulated stock market, with all sorts of potential for insider trading and get-rich-quick scams (which indeed, is becoming more and more clear given the immense capital inflows in 2017). It also functions as a more streamlined method for tax evasion, and so part of the value denominated in the crypto-market (e.g. of Zcash and Monero especially) is actually black market money appearing in a quantifiable way. Therefore, on the one hand, there is actually some serious elite support around the continuance of the crypto currency status quo, which means efforts at regulating it will be slow-moving.

There is also the other reality that given the nature of the blockchain technology, efforts to ban it in one country will simply see it migrate elsewhere. Only a concerted global effort could truly ban crypto-currencies, but in our present day of increased and ever-increasing imperialist tensions and regional frictions this seems unthinkable. Banned in one country, the flows of digital capital will simply go to more accomodating regions, and these will quickly profit by this. This is already being discussed, e.g. in impoverished Belarus, to try to make the country an IT haven for tech money. Such a scheme could conceivably one day in a more peaceful future also be applied to Rojava, to draw in much-needed capital for reconstruction.

Increasing economic problems, and the nature of the speculative market of the coins themselves, will cause a general rush for regulating crypto-currencies just like other stocks or financial derivatives, along with identifications being demanded on exchanges. Therefore there will be regulation but not of an overwhelming kind. After all the correct method to manage networks is not outright banning (which almost never works) but rather canalization. Thus the effort really will be to ‘tame’ crypto-currencies and subordinate them (or the minority of strong coins that survive the eventual crash) to the whims of the extreme part of the upper classes, so they can use them as a continual tool for various speculation and tax evasion schemes-and here trying to cut out the 99% from this profound technological advance, which in fact seriously threatens the entire stratified corporate-State system of today.

As has been seen recently, there will be efforts from various directions to cut off the crypto-market from potential exchange into state fiat currencies (whether as a connection to a bank or a credit card service), and in this way only the most appealing coins to the different topical elite would be allowed to survive (as, e.g. Putin’s considerations of Ethereum or recent discussions of the CryptoRouble, a great deal of Chinese and Hong Kong money gone into BitCash, etc.) Finally States will strive to create their own crypto-currencies which will be a counterpart to their specific fiat, thus monopolizing the market. 

Therefore the true question is not a misguided and unrealistic one about total banning or disappearance-such a view reflects an outmoded understanding of power and resistance in our present world, which almost everywhere functions on network principles (these are not about annihilation or banning, but rather attenuation and neutralization). So too these discussions generally concern specific coins (e.g. the problematic nature of Bitcoin) instead of focusing on the crypto-currency market in its entirety.

However, the true question is in which direction shall this Blockchain innovation be channeled? Towards the upper 1% of the global elite, finance capital, or towards the vast majority of people who will use it to get free from the oppressive present socio-political system?

This is the (as yet largely unacknowledged) true dividing line in the crypto currency world, and it is this that makes for the difference in functioning, methods and goals between FairCoin and the other crypto-currencies. 

The entire discussion about the legalization or regulation of crypto-currencies also exposes a gap in the ideological thinking behind the vast majority of the coins, as these assume economic concerns to be the only ones that count, as if politics did not play a role, as if the State did not consistently intervene to create the conditions for markets (or, recently to bail out improvident banks), and as well as if there were no other form of human community other than an atomized aggregate of speculators and consumers.

The final question in our thought-experiment or hypothetical discussion then becomes, if FairCoin is oriented in a uniquely radical fashion, to serve for individual and collective autonomy and ‘de-coupling’ from the official economic system, what if FairCoin on its own is banned? This then would be a powerful effort of canalization, so that the only existing or permitted crypto-coins would be speculative in nature. But immediately one would have to ask, banned where? Many countries would not be so interested nor find such a reason, and thus funds would flow there. But ultimately and in the final analysis it is true that in a country that proposed to ban FairCoin, would begin a fundamental political struggle, of financial and political disobedience.

Other alternative currencies or social experiments have been banned or sabotaged by governments when they start working too well (e.g. as recently local currency in Argentina, in the past in Austria, or with Robert Owen’s famous Utopian schemes). But these efforts were not digitized, first of all. As well, these economic experiments did not really fit themselves into a larger scheme of resistance, but had a somewhat isolated conception of their own functioning. They had an economistic vision of the world, as if just having a reliable economic system were enough, and politics was simply not worth taking into account. This clearly was an error.

So, learning from past experiences, and in some degree, past heritage, is precisely the reason why FairCoin is interested and focusing on connecting itself to places like Rojava, Catalonia and Exarcheia, as these are sites of resistance and political struggle today, where Faircoin connects itself with other movements of disobedience, and is allowed to present itself in its true role: not as some fetishized ultimate solution to all of life’s problems, but as a very powerful tool for change, among others created by FairCoop. And all this comes from non-State, grassroots radical effort, not petitioning reformist politicians, but out of everyday resistances and personal connections.

This is the slow but steady course that fundamentally changes the world, as opposed to the meteoric ‘flash in the pan’ of quick success and ephemeral duration. It is this that promises security for FairCoin and makes it unique from all other coins: it does not separate itself off on its own economistic, technophilic or speculative world, but instead takes its important part as one piece in a mosaic of political resistances, pluralistic projects and tools for liberation, where we all are working towards making real a collective vision of freedom and autonomy.