Edward DeLeon argues crypto is more transparent than cash and that only about 1% of crypto transactions are illicit, while traditional banking handles far more money laundering. He points out that KYC rules exclude 1.7 billion people from finance and remittance fees eat 20-50% of transfers, problems crypto could solve.
Questions this video answers
April 16, 2022
Over the past 10 years
Roughly 1% or less
Roughly 1.7 billion people
Recipients can lose roughly 20–50% of a small transferred dollar (i.e., pay 20–50 cents per dollar)
Chapters
Aloha, and thank you for stopping in. Over the past 10 years, I've been responsible for onboarding my friends, family, indeed my whole community, to the exciting world of cryptocurrency. The following is my best attempt to encapsulate everything I've taught over the years into a digestible format. I hope you will enjoy it. Thank you. There are no shadowy figures on a cryptocurrency network. Everyone is transparent. Everyone is visible. I may not know who they are personally, but that's not a prerequisite of being able to participate safely in a cryptocurrency environment. I know the rules of the game, and if anyone tries to break the rules of the system, then the system is designed to reject that player. So? So cryptocurrency networks are trustless in that I don't need to know who everyone in the system is in order to trust what's going on in the system. What about the shadowy figures behind central banking? What about the shadowy figures who control the flow and monetary policy of the United States? What about the shadowy figures who finance campaigns and who finance wars? What about the shadowy figures who control most of the wealth in the world? I think it's an unfair characterization to look at an open source, transparent, permissionless system and suggest that somehow, because somewhere, some participants are unknown, that somehow this makes it wrong or illegal or illicit. If you have something bad to say about an industry that is disintermediating another industry that happens to be paying for your campaigns, obviously that is going to color your opinion and we should take everything you say with a grain of salt. And I would just invite you to keep your hands off cryptocurrency while it's in its infancy. Let it grow and become what it needs to become so that it could service humanity in a meaningful way. And that any effort to get in the way of cryptocurrency is essentially saying you want to stop all the good it could do. And I think that is a dangerous proposition and not something that the cryptocurrency industry is going to allow anyway. We're not going to lay down and simply let you dictate the flow of innovation. We're going to fight you tooth and nail, and I think on a long enough timeline, we're going to win. The US Dollar, as the national reserve currency, is everyone's favorite currency, including the favorite currency of criminals. That's not a condemnation of the US dollar system. It is, however, a condemnation of commercial banking, which are oftentimes the frontrunners of money laundering. The real problem we face with that is that the amount of money they make from laundering money from illicit activities, from, say, narcotic sales or human trafficking is so great that the fines amount to a slap on the wrist. We need to use the full length and breadth of the law to go after people who are committing crimes, but not damn the tools that they are using while committing those crimes. Right. If someone commits a murder with a hammer, we don't suddenly say, hey, we need to get rid of hammers. If someone uses cryptocurrency to pay for something illegal, it's the illegal activity that's the problem, not the tool they use to pay for it. Most illicit activity is performed using US Dollars. Crooks would rather use US Dollars and would rather use cash, because cryptocurrency is very traceable. I would also like to point out that most analysis suggests that roughly 1% or less of all cryptocurrency transactions are are tied to illicit activities. I think cryptocurrency is a boon to law enforcement and to justice, and that when someone commits a crime using cryptocurrency, we have a high probability of finding them. Now, if it's tied to something truly nefarious like human trafficking, well, we want to find that right. And blockchain technology allows us to do that in a way that cash simply doesn't. So I look forward to the day when more illicit activity is being used on these networks so we could track more of them down. So it's not a bad thing. The position that somehow we need the government to think for us is highly authoritarian. They don't understand the technology as well as we do. They don't understand these markets as well as we do. If they wish to protect you, what they could do is offer guidelines. They could offer education. They don't need to pass laws restricting access to the market, though. They don't need to pass laws restricting the ability for entrepreneurs to launch new projects or to experiment in the space so they can have their cake and eat it too. They can protect consumers while at the same time allowing entrepreneurs to do what they need to do to explore innovation and to launch new projects into the marketplace to figure out what is the best way to do this right, because these markets are still in their infancy and not everything is going to succeed. But that doesn't mean that we need government regulators to step in and tell us what works and what doesn't. The biggest problem we have is that we tend to use old language and old perspectives to try to understand new things. They look at cryptocurrencies and they try to understand it through the framework of securities or assets and currency. It's a bit like trying to regulate the automobile as if it was a locomotive or a horse and carriage. Yes, it could do some of the things that a locomotive can do and it could do some of the things that a horse and carriage can do. And yet at the same time, it is very different and it has qualities and emergent properties that none of the old systems do. What will most likely happen, and this is what China is doing right now, is you pass regulation and you simply scare all the opportunity away to another country. And that would be a grave mistake for any country or any individual to make at this time at the market. Know your consumer laws become an act of violence when they lock billions of people out of the economic system. Sure, most people in the United States can pass through KYC compliance rules, but tens of millions cannot. And abroad, roughly 1.7 billion cannot. What you end up having to do is subsist on a very localized life just using cash only. How do you earn the cash when you can't prove who you are and many jobs can't hire you if you can't pass through KYC AML compliance? And I know that right now there are millions of people who are suffering from food insecurity and housing insecurity as a result of these laws. The problem is we allow them to be victims by locking them out of the system because when they attempt to send money back home to their families, predatory market actors get in between them and they take the bulk of that money. So I know for a fact that when these people send money back home, they end up getting ripped off by check cashing venues or money remittance markets, right? Where essentially they want to send a dollar home and they have to give up 20 to 50 cents of that dollar just to feed their families. So we're talking about robbing some of the poorest people in the world. If that doesn't piss you off, then, well, we're probably not going to be friends because that's a very big deal. And I have empathy for people that go through those struggles because I've seen it firsthand. It is an act of violence. It's essentially not throwing a life preserver at someone who is drowning. And we sort of do this under the guise of protectionism. We say this is for your best interest to lock these people out. And I'm here to say that it's not in our best interest to lock billions of people out of the economy. Anyone who works in cryptocurrency understands that we could bank the unbanked and that we could completely disintermediate companies like Western Union and MoneyGram and make them an unnecessary part of the market. I think it's really important that we drive this point home that if I cause an inefficiency that harms someone, I'm a criminal. Right. And so we have these criminal organizations that are damaging some of the poorest people in the world. The money that goes into developing nations from developed nations often makes up 40 to 60% of the money that arrives there. And we're saying we're going to cut that in half? No, no. I think that's a market opportunity. And that's why in Latin America and in other developing nations, cryptocurrency adoption is far higher than it is in developed nations. A blockchain network doesn't care if you have a government id. It doesn't care if you have a birth certificate. It doesn't care if you have a passport. All it needs to know is, do you know the private keys to this account? And then now suddenly you have access to basic finance. And I believe that is probably the first and most important step decentralized finance and cryptocurrency will make, in that it will give everyone in the world access to basic financial tools.
