19 lines
2.6 KiB
Markdown
19 lines
2.6 KiB
Markdown
# Crypto assets pose a risk to the state
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Crypto assets exist for a single purpose: [regulatory arbitrage](../concepts/regulatory-arbitrage.md). Effectively to undermine the rule of law and circumvent controls that nation states have put in place to safeguard the public and protect their economic interests. These include controls like [sanctions enforcement](../concepts/sanctions-enforcement.md), [know your customer](../concepts/kyc.md), [anti-money laundering](../concepts/aml.md) and [counter-terrorism financing](../concepts/ctf.md).
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Dark flows of crypto assets outside of the regulatory perimeter undermines these controls by allowing criminals to circumvent the law and engage in [illicit financing](../concepts/illicit-financing.md) and avoid law enforcement controls. This undermines the rule of law and the capacity of the state to protect its national interests.
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While crypto assets don't pose an *existential* threat to the state per se, they do enable crime and undermine policy which weakens trust in democratic institutions and threatens the way of life for law-abiding citizens.
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## References
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1. Bindseil, Ulrich, Patrick Papsdorf, and Jü rgen Schaaf. 2022. ‘The Encrypted Threat: Bitcoin’s Social Cost and Regulatory Responses’.
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1. Diehl, Stephen. 2021a. ‘The Political Case for a Blanket Cryptocurrency Ban’. 30 March 2021. https://www.stephendiehl.com/blog/banbitcoin.html.
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1. ———. 2021b. ‘How to Destroy Bitcoin’. 13 July 2021. https://www.stephendiehl.com/blog/destroy-bitcoin.html.
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1. ‘Guidance on Cryptoassets’. 2019. Financial Conduct Authority. https://www.fca.org.uk/publication/consultation/cp19-03.pdf#page=11.
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1. Hacker, Philipp, and Chris Thomale. 2018. ‘Crypto-Securities Regulation: ICOs, Token Sales and Cryptocurrencies under EU Financial Law’. European Company and Financial Law Review 15 (4): 645–96.
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1. Huang, Sherena Sheng. 2021. ‘Crypto Assets Regulation in the UK: An Assessment of the Regulatory Effectiveness and Consistency’. Journal of Financial Regulation and Compliance.
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1. Rae, Shaela W, and Lorraine Mastersmith. 2019. ‘Crypto Asset Trading in Canada: Entering a New Era of Regulation’. Banking & Finance Law Review 35 (1): 153–85.
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1. Shri T Rabi Sankar. n.d. ‘Cryptocurrencies – An Assessment’. Reserve Bank of India. Accessed 2 March 2022. https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1196.
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1. Zwitter, Andrej, and Jilles Hazenberg. 2020. ‘Decentralized Network Governance: Blockchain Technology and the Future of Regulation’. Frontiers in Blockchain 3. https://www.frontiersin.org/article/10.3389/fbloc.2020.00012.
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