- >How Would the US Censor Bitcoin?
How Would the US Censor Bitcoin?
Few technologies are as polarizing as Bitcoin. Bitcoin represents a new currency that hands back financial power to the people. It’s a way to upend tightly-controlled financial systems that often work for the elites and leave millions disenfranchised. It’s a store of value and a formidable asset that in just twelve years has left age-old assets in the dust. But also, bad actors have taken advantage of Bitcoin to facilitate dodgy activities.
These factors have made Bitcoin a target for governments as they look to clip its wild wings. The US, in particular is a country that could set the tone for how Bitcoin is treated in other jurisdictions. Over the years, there have been both murmurs and shouts about the need to clamp down on Bitcoin. The question is, how exactly would the US pull that off?
If the US were to censor Bitcoin, how would they do it? Would it even succeed? This piece explores such a scenario in depth.
Hope Mutie | Mar 24, 2021
Former and Current Administrations
To get a clearer look at how the US would censor Bitcoin, we need to look at presidential administrations’ attitudes. Some regulators under the Donald Trump admin were generally friendly, although cautious towards Bitcoin and cryptocurrency. Others had a hardline stance. For instance, the Financial Crimes Enforcement Network (FinCEN) this January tried to ram through some midnight unfriendly regulations to curtail Bitcoin just before the Biden admin took over. Treasury Secretary Steven Mnuchin was no Bitcoin fan – once declaring “cryptocurrencies, such as Bitcoin” – a “national security issue.”
Trump himself was particularly unaccommodating of Bitcoin. He famously tweeted in 2019 that he was “not a fan of Bitcoin and other cryptocurrencies” and that they were “not money.” It later emerged that he had intended to go after Bitcoin as early as 2018.
What about the Biden administration? His most high-profile finance department pick, Janet Yellen, has indicated in the past that she’s not a huge Bitcoin fan. But she has recently struck a more conciliatory tone, contending that while cryptocurrency can be used for illegal activity, they have the “the potential to improve the efficiency of the financial system.”
But other Biden picks look more open-minded about cryptocurrency. SEC chairperson, Gary Gensler, taught a course on blockchain technology and digital currencies at MIT Sloan in 2018. He has also favorably testified about Bitcoin and crypto in congress. The new financial regulator review team also seems to be crypto-leaning. We have Reena Aggarwal, a blockchain technology enthusiast, and Chris Brummer, a Fintech podcast host (the Fintech Beat). Next, there’s Simon Johnson, a co-author of a book espousing blockchain’s potential to transform the finance landscape. Finally, Lev Meland’s time at the Treasury Secretary included pushing for the US’s adoption of a digital dollar.
How The US Would Censor Bitcoin
If the US government decided to seriously crack down on Bitcoin, how exactly would they do it? If, for instance, Trump had managed to coerce regulators to censor Bitcoin, how would it play out? The first thing to realize is that Bitcoin’s distributed nature alone would pose a serious headache to such ambitions. Bitcoin’s network is not confined to a particular office that authorities can raid. Neither is there one specific person in charge who can be arrested and forced to take it down. Bitcoin is controlled, owned, and operated by users from every corner of the planet.
That said, if the US were to go at it, they would probably deal a significant blow to the infrastructure supporting Bitcoin. Let’s see how.
#1. Clamping Down on Exchanges
This is perhaps the most feasible way the US government would censor Bitcoin. The degree to which it would do so differs. They could completely ban Bitcoin exchanges – meaning declare them illegal. Such action would be justified by claims of Bitcoin being a ‘national security issue.’
Lawmakers and regulators would probably offer embellished explanations of how the currency is being used to facilitate all manner of illegal activity. The government would also likely target domain names and hosting servers and block access to exchanges’ websites.
#2. Targeting Fiat On-ramps
Another move could involve targeting payment Fiat on-ramps such as banks and other gateways.
The government could also institute extremely harsh guidelines on exchanges’ operations. Such guidelines could include requiring exchanges to provide daily reports of transactions exceeding a certain (could be very little) threshold. The effect? An onerous process that would exhaust exchanges to the point that they’d just give up.
#3. Go After Content Platforms
The US government could also curtail the dissemination of Bitcoin content. Content platforms like YouTube and social media platforms like Twitter, Facebook, and Instagram could be restricted from hosting Bitcoin-related content.
Indeed, last year Google inexplicably censored Bitcoin and cryptocurrency-related content on YouTube. What if such platforms, which are somehow monopolies, were forbidden to host such information? It would enormously interfere with getting the word out on Bitcoin.
Would the US Censor Bitcoin Content?
It’s one question of how the US would attempt to censor Bitcoin, and quite another on whether it would actually go down that path. First, because successfully suppressing Bitcoin is an incredibly long-shot. Senator Mike Crapo admitted as much during a congressional hearing, saying he’s “pretty confident” the US wouldn’t be able to ban Bitcoin thanks to it being a “global innovation.”
But putting aside technical considerations, banning Bitcoin – if it were possible – is hardly an open and shut case. It’s also a geopolitical and civil liberties issue. The cypherpunk community is adamant that Bitcoin is code, and code is free speech. Would the US, which boasts as a bastion of free speech, really risk that reputation?
The actions above would also be seen as government overreach and would be widely panned. It’s unlikely the US would risk being seen as an authoritarian. Also, it would be a politically un-envious path to take.
Bitcoin has proven uber-resilient against censorship. That’s thanks in large part to its simple yet ‘unhackable’ distributed structure. But other more nuanced dynamics come into play as well. The US would probably succeed to an extent in crippling Bitcoin’s adoption, but censoring it may not be so simple after all. But if the country got the mind to do it, we would expect it to take one or more of the above actions.