Edward DeLeon argues cryptocurrency deserves First Amendment protection as code and money combined. He warns that strict KYC/AML rules and national bans exclude billions of people, enable surveillance, and stifle innovation, pointing to failed crypto restrictions in China and Russia as proof that heavy-handed regulation doesn't work.
There are already Supreme Court precedent to suggest that money is speech according to Citizens United, and that code is also a form of speech. And cryptography is also a form of speech. Cryptocurrency is a combination of all three. It's money, code and cryptography. It's standing on very solid ground to be protected by First Amendment rights. And I believe on a long enough timeline, these battles will play out in the court and we will realize that people should have the right to deploy their own cryptocurrency systems. People should have the right to use the money of their choice. Your speech should be protected de facto as a natural state of things. If you use it wrong and harm people, sure, that's a problem and we should explore that. But we should still be free to express ourselves how we see fit. I think money in particular, it's very important that we have our freedom of speech protected and that we're able to choose the money that we most identify with and use it as a language to express value to one another still being protected by the First Amendment. KYC stands for know your consumer and has been designed to prevent money laundering, tax evasion, and other financial crimes. And on the surface, it seems like a perfectly rational thing. What ends up happening in practice, though, is that it locks billions of people out of our financial system. They live a kind of half life where they don't get access to the things that we take for granted every day. So while I agree that under certain circumstances it makes sense to follow KYC AML compliance rules, to suggest that all systems should follow KYC AML compliance rules would be part and parcel for advocating for surveillance capitalism. Surveillance capitalism is a very real problem. We're being spied on constantly. To suggest that we always have to expose our personal information and our identity for every transaction we make throughout our entire lives would be a form of totalitarianism and would violate your basic civil rights to privacy and free association. KYC is something that most banks follow. And there is some push for cryptocurrency projects to follow it as well. Attempting to add an extra layer of regulation on them will usually fail. As China and Russia discovered is the more they tried to stamp down on Bitcoin and Ethereum and the other cryptocurrencies, the more they realized that they couldn't. And it's in bad practice to pass laws that you actually can't enforce. The nations that do open their arms to cryptocurrency projects are going to be the ones that reap the most benefit from the next Stage of the information age. There are some peers of mine who think regulation is sometimes good. They say that once you have the rules of the market in place, institutional investors can get involved and they can start navigating the markets knowing full well that they're doing so legally. I don't think we should be inviting institutional investors to come and take over the market like they have in traditional markets. I think we should be looking to protect the interests of the wider market, which means protecting room for innovation. And it means not passing laws that will restrict access or, or restrict room for innovation in the markets, which is what usually happens when regulators get involved. So I'm cautiously optimistic that we will get it right on a long enough timeline. But I'm also confident in the knowledge that no matter what laws we pass at any nation state level, they can't regulate the wider market and they can't regulate cryptocurrency itself, which is international in scope. You could only harm the people who are participating in those markets, which would be unfortunate. And I think regulators will realize that at some point. When governments try to regulate innovation, they often really kind of miss the point. And one of the classic examples is the Flag act passed in the uk. The Flag act emerged when automobiles were first coming onto the scene. And at the time, the UK was very protective over its locomotive industry. It was one of the leaders of the industrial age. It had huge market lead also in automobiles. They were making some of the best cars the world had ever seen up until that point. And then they passed something called the Flag act, which stated that an automobile required multiple people to operate it. Most importantly, a flagman, which was someone who had to run in front of the automobile and warn everyone that it was coming with a flag, which in retrospect is ridiculous. And we recognize it's ridiculous because it's attempting to regulate new technology from the perspective of an old technology is trying to look at automobiles as if they were locomotives. We're very close to making the same mistake here in the United States and in other developing nations, or in other developed nations around laws regulating cryptocurrency. In that we have a new technology, it has some of the properties of currency. It also has some of the properties of a security. But it's neither of those things. It's something entirely different and has properties that neither of those two things will ever have and cannot have, simply because they're not riding on the new technology. So I think it's very important that we use history as a lesson here, and we don't kill the golden goose and pass laws that have a negative impact on the markets that they claim to be protecting.
