What's she Yellen about?
What’s She YELLEN about?
US Treasury Secretary Janet Yellen gave her first speech on digital assets on Thursday. She called crypto “transformative”, and talked of how “regulation should be based on risks and activities, not specific technologies.”
“Wherever possible, regulation should be ‘tech neutral.’”
This is a great start, which resulted in a largely positive reaction from the crypto industry, but it’s worth digging into the nuance. Consider this statement made during the speech:
“Some proponents speak as if the technology is so radically and beneficially transformative that the government should step back completely and let innovation take its course. … On the other hand, skeptics see limited, if any, value in this technology and associated products and advocate that the government take a much more restrictive approach.”
It’s the age-old position of regulators, that given two opposing viewpoints, the correct answer must lie somewhere in the middle. She reiterates this sentiment here:
“Our regulatory frameworks should be designed to support responsible innovation while managing risks — especially those that could disrupt the financial system and economy.”
How do you simultaneously foster a technology that was DESIGNED to disrupt the financial system, while making sure it DOESN’T disrupt the financial system? You would be fostering something else that definitely doesn’t stay true to the original vision and innovative potential of crypto.
Let’s not fall into the trap of presuming that when faced with 2 alternatives that both of them are equally valid. As Ron Paul once told me when we discussed crypto regulation:
“Don’t be too anxious to concede any of your desires and demands and your principles to the government, and say “well, we think we need a little bit of government guidance to make sure that we’re legal” and this sort of thing. Don’t concede. I don’t like to think that “a little bit of government regulation is what we need”. I don’t believe that. What we need is a lot more freedom.”
Given that crypto was created as an alternative monetary system, one that lies outside the reach of politicians’ control, one that’s radically transparent and so doesn’t need the same intervention from regulators, and one that enables financial freedom, we should be very careful to encourage politicians who’d try to force this new thing back into traditional frameworks.
Block Breach
This week Block, formerly known as Square, notified 8.2 million previous and current customers that information associated with their accounts had been breached. The information taken included full names and unique brokerage account numbers, according to the official SEC filing:
“...a former employee downloaded certain reports of its subsidiary Cash App Investing LLC (“Cash App Investing”) on December 10, 2021 that contained some U.S. customer information. While this employee had regular access to these reports as part of their past job responsibilities, in this instance these reports were accessed without permission after their employment ended”.
As a public company, Block is required to file a Form 8-K to notify investors of events that may be important, and it is one of the most common types of forms filed with the SEC. This seems to be the only public statement made about the breach, and it’s presumed they otherwise reached out directly to those affected.
Immediately following the incident, Block initiated an investigation with an outside forensics team. It was also reported that some customers had more data leaked, including portfolio value, and information related to their holdings, and day trading activity. Fortunately the breach did not include any “usernames, passwords, Social Security numbers, birth dates, payment card or bank account information, addresses or other personally identifiable information”.
Block assured its customers in the filing that:
“The company takes the security of information belonging to its customers very seriously and continues to review and strengthen administrative and technical safeguards to protect the information of its customers”.
Keeping account information and sensitive data unencrypted and visible to employees hurts people, and the more hacks that take place, the more companies will start to wake up to this reality.
Musk Gives Twitter a Rocket Boost
Edgelord Elon Musk has invested almost $3 Billion this week to become a nearly 10% stakeholder in Twitter (TWTR). According to the official SEC filing, the Tesla CEO now has 73,486,938 shares of Twitter common stock. The revelation actually sheds light on a cryptic tweet he posted last week:
Twitter CEO, Parag Agrawal, made an announcement of his own about Elon joining the board:
But of course, Dogecoin (DOGE) spiked immediately after the news dropped (only to settle rather fast) and Twitter enjoyed a hearty 20% boost as well.
While we all collectively wept at the departure of Jack Dorsey at the end of last year, we’re excited to have Elon help guide their direction. Maybe we’ll even get an edit button…
When One Head Is Cut Off…
542 BTC (or about $25 million) was seized in a successful operation by German authorities that shut down one of the largest darknet markets in the world. Working in coordination with the US Justice Department, German Federal Criminal Police (aka Bundeskriminalamt) were able to shut down the servers which made up the infrastructure of the Hydra Market. The site enabled anonymous users to participate in a number of illegal activities such as the buying and selling of illicit goods and services, stolen financial information, and fraudulent documents. It was also known to offer money laundering and mixing services. Transactions on Hydra were conducted using cryptocurrency.
Chief Jim Lee of IRS-Criminal Investigation said in the official DOJ press release that the operation was successful due to the Cyber Crimes unit’s tracking of cryptocurrency:
“Our Cyber Crimes Unit once again used their cryptocurrency tracking expertise to help take down this site and identify the criminal behind it. Denying criminals a space to operate freely to conduct their nefarious activities is the first step in stopping this activity from happening altogether.”
According to the DOJ, the individual who was arrested, Dmitry Olegovich Pavlov, is a Russian resident and allegedly acted “as an active administrator in hosting Hydra’s servers” and is accused of having “facilitated Hydra’s activities and allowed Hydra to reap commissions worth millions of dollars generated from the illicit sales conducted through the site”.
Parallel to this announcement came an official sanction against Hydra from the US Treasury Office of Foreign Assets Control (OFAC) as well the addition of over 100 BTC wallets that were identified during the operation.
Secretary of the Treasury Janet L. Yellen said in a statement:
“The global threat of cybercrime and ransomware that originates in Russia, and the ability of criminal leaders to operate there with impunity, is deeply concerning to the United States. Our actions send a message today to criminals that you cannot hide on the darknet or their forums, and you cannot hide in Russia or anywhere else in the world. In coordination with allies and partners, like Germany and Estonia, we will continue to disrupt these networks”.
You know what they say about Hydra — cut off one head and two more appear. It will definitely be interesting to see what the response from the shadows will be. Moreover, how will this affect those who do not run international crime organizations and just want to maintain baseline privacy of their own?
Maller’s Move
CEO of Strike, Jack Mallers, made a slew of announcements at the 2022 Miami Bitcoin Conference this week.
Strike will be integrating with Shopify, which will enable millions of storefronts in the USA to accept payments on the Lightning Network.
According to a press release:
“Strike’s integration enables Shopify merchants to diversify their existing payment options and reach untapped global markets and purchasing power. Strike’s integration also allows Shopify merchants to generate savings through low-cost payment processing. By instantly converting bitcoin (BTC) payments to dollars, Strike removes certain complexities merchants face in holding bitcoin.”
Strike has partnered with NCR, which is the largest supplier in the world of point-of-sale systems.
Strike has partnered with payments firm Blackhawk.
Mallers has been working with policymakers, such as Sen. Cynthia Lummis (R) from Wyoming, to “ensure that we have the right to build freely in this country”
“… we need to protect our ability to innovate.”
Mallers announced to a cheering audience how these moves will help bring bitcoin back to its payment roots:
“If we can help make the Bitcoin network more accessible and usable we believe we can change the world.”
We definitely support the idea of increasingly using crypto in our everyday lives.
By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.