The Beneficiaries of Cryptocurrencies

Image: Rūdolfs Klintsons
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By JÃO CARLOS LOEBENS*

Cryptocurrencies have virtually no regulation, why?

Private currency, by definition, is currency issued by a private entity. Talking about “private currency” is a bit strange, as we are used to talking only about “public currencies”, such as the real, dollar, Chinese yuan, Russian ruble, Japanese yen, euro, among others. Public currencies are issued or controlled by the Central Banks of countries.

In the United States, for much of the 1850th century (around the XNUMXs), companies and churches were allowed to issue private currency. If the sender disappeared, the coin became useless. These private coin issuers were called “wildcat banks”, which means “wild cat banks”, due to its low reputation after decades of operation. The name of companies/banks gato-wild was due to the address often being that of a remote location, which was said to be inhabited more by wild cats than by people. In this sense, I would say that we could establish a good relationship between the wild cat institutions of that time and our current countries “fico-criminal hideouts”, generously called “tax havens” by the dominant discourse.

Cryptocurrency is a medium of exchange, usually issued in a decentralized way with blockchain technology and cryptography. Currently there are several cryptocurrencies (Bitcoin, Ethereum, Tether, USD-Coin, Solana, etc). The first cryptocurrency created was Bitcoin in 2009, having reached an apex of appreciation in 2021, with subsequent expressive falls and oscillations.

Despite the expressive volume and worldwide circulation of cryptocurrencies, in terms of regulation, there has been a resounding absence of public power in this matter. The OECD, which brings together rich countries, talks about the lack of a regulatory framework for cryptocurrencies, citing their complex and changing nature. The Central Bank of Brazil, despite citing in Communiqué No. 31.379/2017 that these currencies can be used in illicit activities, turns a blind eye to possible (and necessary) regulation. And obviously, the Revenue Service (Federal, State and Municipal) is practically unable to collect the related taxes.

In terms of usage, cryptocurrencies have started to be used, and they are mostly used by the top floor in terms of wealth – i.e. the ultra rich. Poor people do not use or do not have access to cryptocurrencies. By logical deduction, if cryptocurrencies are mainly used by the ultra rich and lend themselves to illicit activities, then it is the ultra rich crooks who are the main users and beneficiaries of cryptocurrencies.

The prevailing economic system today, especially in the West, is neoliberalism, which has as its strong pillar the unlimited concentration of income and wealth. The market (which actually has a name and address – mainly bankers) is actually the group of ultra rich people in the nation, who claim that the government must “serve the market”, working in favor of what leads to the concentration of income “from the market”. ” (the ultra rich).

The United States Internal Revenue Service subpoenaed cryptocurrency company Sfox to reveal the identity of users with transactions greater than $20.000. The solution is there, and it's simple. The fact that it is a simple solution (transparency) does not mean that it is easy. The difficult thing is to face the ultra-rich and their illicit tricks to get rich. In the end, it is the ultra-rich who finance the election campaigns of most politicians, and it is these politicians who decide.

In this sense, for the ultra-rich to increase their wealth and income concentration with hidden and illicit operations, using cryptocurrencies, it is necessary that there is no regulatory framework. This is, in my view, the real reason why the OECD and other bodies fail to achieve a regulatory framework. OECD & Cia, without stating it clearly, or even without the employees realizing it, works to keep the gap or legal absence open, so that the ultra-rich can cheat with impunity (fraud, trafficking, theft, evasion...), earning and accumulating a lot of money (especially of undeclared or dirty origin), using the “complicated” (contains irony) cryptocurrencies.

*Joao Carlos Loebens is a doctoral student in economics and tax auditor at the State Revenue Service of Rio Grande do Sul.

 

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