Will Governments Attack Bitcoin? with Lyn Alden

Summary

The video discusses potential government crackdowns on Bitcoin and if authorities could target user assets. Speakers acknowledge governments taking extreme actions is unlikely currently due to polarized politics and pushback from pro-crypto groups. However, privacy, energy use, surveillance and taxes remain battleground issues. There's now over $1 trillion in Bitcoin exposure in the US, making an outright Bitcoin ban impractical. Complacency is dangerous - the crypto community must remain vigilant in defending the network and its decentralized qualities.

Takeaways

• 😀 There are risks of governments trying to crack down on Bitcoin, but the US currently has a polarized political environment that makes major sweeping action difficult.
• 😯 There is legal precedent of pushback against unconstitutional or unreasonable government overreach related to open-source cryptography and Bitcoin ETF regulation.
• 🤔 Lynn sees the main privacy, surveillance, tax, and energy usage as the main areas where government may try to restrict Bitcoin.
• 😃 Jason believes over $1 trillion in Bitcoin exposure now exists in the US across various holders, making outright Bitcoin bans very difficult.
• 😕 Ongoing vigilance is still needed as Bitcoin's success is not guaranteed without continuing human activity and support.
• 👍 The SEC's approval of spot Bitcoin ETFs and major financial companies offering Bitcoin exposure helps deter drastic governmental action.
• 😡 Historically, one party controlled 70% of Congress and threatened the Supreme Court when gold was made illegal, unlike the current polarized climate.
• 🤨 The government trying to drive Bitcoin's value to zero with policy would face extreme uphill challenges given current exposure/adoption.
• 🧐 Tax penalties and restrictions on certain Bitcoin retirement accounts remain one possible regulatory attack vector.
• ☺️ Cryptography activists legally fought back in the 1990s against munitions export restrictions on open-source code, helping set a strong legal precedent.

Q & A

What are some of the risks that the US government could potentially take against Bitcoin?

Some risks include increased regulation around privacy and surveillance of Bitcoin users, unique tax penalties targeted specifically at Bitcoin, and restrictions on Bitcoin mining's energy usage.

What are some reasons why the US government today would have more difficulty banning Bitcoin compared to when they banned gold in the 1930s?

The political environment is much more polarized today, making it harder to take drastic actions. Also, there are many more legal resources ready to push back against unconstitutional actions compared to the 1930s.

How did Phil Zimmerman successfully resist government crackdown on cryptography in the 1990s?

He published the code in a book, relying on First Amendment protections of free speech. The government eventually had to back down from prosecuting him.

How might the approval of Bitcoin spot ETFs make it harder for the government to take action against Bitcoin?

The mainstream acceptance signified by SEC approval and big firms like BlackRock trading Bitcoin ETFs makes it politically riskier for the government to crack down.

Where does Brandon think the main regulatory battleground is shifting to regarding Bitcoin?

He believes the battlefield is moving to issues around privacy, surveillance, taxation, and energy usage monitoring rather than outright bans.

What are Brandon's estimates for how much Bitcoin exposure already exists with US individuals and institutions?

Brandon estimates over $1 trillion worth of Bitcoin and Bitcoin-related assets are already held by hedge funds, mining companies, MicroStrategy, and other entities.

What does Brandon say is the significance of so much Bitcoin exposure already existing?

It would make it extremely difficult politically and economically for the US government to try to reduce that $1 trillion to zero value.

What does Lynn warn we still need to be vigilant about even with positive Bitcoin developments so far?

We still need to watch out for potential increased regulation around privacy, surveillance, taxation, and energy usage related to Bitcoin.

What does Brandon say about whether Bitcoin's ultimate success is inevitable or depends on ongoing human activity?

He says Bitcoin's success is not pre-ordained or separate from human activity - it still depends on the continued efforts of its supporters.

What were some tactics used in the 1990s to resist government crackdowns on cryptography?

Publishing code in books to invoke First Amendment protections, and making T-shirts with code printed on them to protest export controls on cryptography software.

Outlines

00:00

🤔 Government regulation risks for Bitcoin

Lynn discusses the risks and possibilities of the US government trying to crack down on or confiscate Bitcoin. She examines historical precedents like the ban on gold in the 1930s and more recent legal battles, concluding there are some areas of concern around privacy, energy usage, surveillance and taxes but also roadblocks that make extreme crackdowns unlikely.

05:03

😮‍💨 Main regulatory battlegrounds ahead

Jason agrees the battlefield has shifted away from direct attacks on Bitcoin as an asset, given widespread institutional adoption. Instead he sees privacy, surveillance, energy and taxes as the main areas where Bitcoin the network will continue facing pressure from regulators.

Keywords

💡Bitcoin

Bitcoin is a decentralized digital cryptocurrency and payment system. It is mentioned throughout the video as the asset that governments may try to regulate or restrict. For example, the video discusses potential government crackdowns on Bitcoin, taxes on Bitcoin assets, and privacy issues related to Bitcoin transactions.

💡government

The government refers to political leadership and regulatory agencies that could impose rules around cryptocurrencies like Bitcoin. The video explores whether and how governments like the US government may try to control, tax, or restrict Bitcoin.

💡regulation

Regulation refers to potential laws, restrictions, tracking, or oversight that governments may try to impose on Bitcoin use and ownership. The speakers discuss past attempts at crypto regulation and where future regulatory battles may occur.

💡privacy

Privacy refers to the ability to use Bitcoin anonymously without transactions being tracked back to a person or entity. The video suggests privacy is an area governments may try to restrict but will face opposition.

💡tax

Tax refers to potential taxes governments could levy specifically on owning Bitcoin assets or conducting Bitcoin transactions. This is presented as one regulatory approach governments may take.

💡energy usage

Energy usage refers to the electricity required to run the Bitcoin network through mining. The video suggests governments may seek more data on Bitcoin's energy usage to restrict its growth.

💡legal challenges

Legal challenges refer to lawsuits and court cases that have successfully opposed government overreach into crypto regulation, like the blocking of Bitcoin ETFs. This demonstrates tools to fight regulation.

💡retirement funds

Retirement funds that invest in Bitcoin may receive some protections against regulatory crackdowns. The speaker suggests keeping some Bitcoin exposure in retirement accounts to hedge risks.

💡dictatorship

The video compares current US government to the 1930s when FDR had dictatorship-like power to restrict civil liberties like banning gold ownership. This level of control is unlikely today.

💡win

The speaker states Bitcoin does not just magically "win" against government regulation without ongoing effort from the crypto community to fight against restrictions on privacy, tax, energy policies etc.

Highlights

Lynn discusses the political climate in the 1930s when gold was made illegal in the US, noting one party had 70% of Congress and could push through policies

Lynn argues the current US political environment is polarized, making it hard to push through major sweeping policies, especially unpopular ones

Lynn notes the SEC recently lost in court over blocking Bitcoin ETFs, showing decent rule of law and legal pushback still exists

Lynn cites the 1990s precedent of Phil Zimmerman publishing cryptography and relying on free speech protections, forcing the government to back down

Lynn thinks tools exist to push back against extreme government actions against Bitcoin, but vigilance is still important around privacy, tax, etc.

Jason agrees the main battlegrounds now are privacy, energy, surveillance and tax related to Bitcoin

Jason estimates over $1 trillion in Bitcoin and Bitcoin-related exposure already exists in the US, making it hard for the government to go to zero

Jason stresses we can't be complacent and Bitcoin does not just magically win separate from human activity

Lynn brings up the 1930s political climate when FDR had unusual power to take actions like making gold illegal

Lynn notes recent SEC loss in Bitcoin ETF court case shows decent legal pushback still exists

Lynn discusses 1990s precedent of Phil Zimmerman using free speech to resist government cryptography controls

Jason estimates over $1 trillion in Bitcoin exposure likely already exists in the US

Jason stresses Bitcoin does not just automatically win, it depends on continued human activity

Lynn says privacy, tax, energy usage are likely next battlegrounds around Bitcoin

Jason agrees privacy, surveillance, tax are main issues Bitcoin faces next

Transcripts

and speaking of the government a popular

question we get especially in the chat

now is uh people asking and this is for

Lynn is specifically what are the risks

that the government can come after

Bitcoin um now everyone not saying

anyone saying that's a probability but

also as Brandon quidam here at Swan who

we all know and love is he he has a

famous quote where he says uh the

government is hungry and your assets

look tasty if things happen to the fiat

currency he's going to love that I

brought that up as things uh get maybe

more desperate for the government or for

Fiat whatever do you do you potentially

see them coming after Bitcoin are there

attack vectors to be concerned about um

so Lynn I'd love your perspective there

so first of all I point out that with

with so many countries in the world

obviously some countries are more at

risk than others um so to I'll Focus the

rest of the question on the United

States perspective um you know the the

the most commonly cited one is back in

the 1930s when they made gold illegal um

but one point one important piece of

context there was that one political

party had about 70% of Congress uh they

had a super majority they could do it

they could even like you know kind of

pack the Supreme Court and they even

kind of threatened to at certain points

it was a very um like Society all kind

of coester on one poll and was able to

do almost anything uh and so whereas

today in the United States we have a

very polarized political environment um

where it's hard to kind of do really

major sweeping things um especially that

are that would be somewhat unpopular in

addition we saw from the SEC for example

I mean they they lost in court um about

kind of you know their their ongoing

blocking of the spot Bitcoin ETFs and

and their their reasoning was found to

be um you know arbitrary and capricious

um by uh appeals court um and so we

still have decent rule of law and a

fairly polarized environment which means

there's a lot of legal Firepower willing

to push back on things that that are

unconstitutional or otherwise go against

um you know kind of reasonable

interpretations of the law another

really good precedent was back in the

1990s when Phil Zimmerman um you know

published new forms of of Open Source

cryptography for people to use and it

got you know because it was open source

it got around the world and the United

States went after him criminally they

they opened criminal investigations for

exporting Munitions without a license

they were trying to kind of not let this

technology spread too much and so what

he did was he published the code in a

book and says well it's it's words and

numbers it's it's it's speech um and so

he kind of relied on the First Amendment

to protect him and the federal

government had to end up backing down

from that um Even Adam back was involved

in that kind of whole period of time

they would they would make t-shirts to

say this t-shirt is legal to export it's

it's it's illegal Munitions because it

has dangerous code written on it kind of

to show the absurdity of those laws

applied in that context and so I think

that there are a lot of tools that would

push back against some of the more

extreme things that could happen and I

also think that um you know some of the

basically this the SEC approval of the

spot Bitcoin ETFs and the marketing by

Black Rock and Fidelity and all that in

a lot of people's minds somewhat der

risks um the possibility of kind of

major Draconian action against Bitcoin I

do think it's still important to be

vigilant I mean there's there's

certainly going to be taxs around

privacy the private use of Bitcoin um

there's certainly going to be attacks

against um you know right now we're

seeing you know kind of them trying to

get information on the Bitcoin energy

usage of of Bitcoin monitors which is

kind of unprecedented relative to other

sectors and so there's there's there's

you know potentially legal um push back

against that um so there are areas that

I think to be concerned about um but uh

there are a lot of roadblocks

fortunately in the way of some of the

more Draconian types of crackdowns

including uh some of these retirement

structures I mean even if even one of

the one of the attack vectors is like

kind of a unique tax penalty against

Bitcoin and having it in certain

retirement accounts might or might not

but at least there's a chance that would

protect against those sorts of um

specific attack vectors I loved I loved

your whole answer there um and I really

appreciate you bringing up the political

climate around 6102 with Jason on the

call because I have a training video for

all the private guys where I talk about

that and talk about how FDR was probably

the closest thing to a dictator we've

ever seen and the political climate

couldn't be more different so thank for

making me look good there um but uh and

I want to I want to Echo um some of what

Lynn said probably even take it a step

well I would agree that I think the

battlefield has shifted to what you're

saying privacy energy surveillance tax

that that's where the real fight's

goingon to take place it's between

Bitcoin the asset and Bitcoin the

network and I think the ETFs and all the

development that has happened I mean

Bitcoin the asset is here it's it's in

Black Rock ctfs it's in people's

portfolio I've kind of run a rough kind

of calculation more of an estimation

really but if you look at all the

Bitcoin that American owns all the hedge

funds that have Bitcoin exposure all the

mining companies micro strategy you add

up all of that exposure you get a very

large very very large number there's

probably a trillion dollars of Bitcoin

and Bitcoin related exposure in the US

the government just trying to take that

to zero is going to be a extremely

uphill battle um but like Lyn said um we

can't be complacent this is not a done

deal Bitcoin does not just magically win

it's not it's not it's not pre-ordained

in a way which is separate from human

activity and and all of us um but it's

but I think surveillance privacy tax

those are the

[Music]

battlefields