Trudeau’s Truckers Reveal Problems with Banking Infrastructure
And crypto isn't the solution you might think it isOn February 14th, Justin Trudeau, the Prime Minister of Canada, invoked the Emergencies Act in order to stop the flow of funding to the truckers who were protesting vaccine mandates in Canada. This order allows and encourages banks to freeze the accounts of anyone suspected of involvement with the protest. The Canadian use of the Emergencies Act in this way has been widely criticized for its draconian and expansive overreach of governmental authority. However, that hasn’t stopped the Canadian government from moving forward with the plan, and they have said that they have already begun freezing accounts.
Even before this, though, a Canadian judge had halted access to funds donated to the truckers through the GiveSendGo website. Additionally, GoFundMe, of their own accord (not under government compulsion), halted fundraising, and even initially said that any money not explicitly requested back from donors would be given to a different cause of GoFundMe’s choosing.
But the trucker rally is not the first time that citizens have had the financial system used against them for participating in lawful but unpopular practices.
The United States government effectively normalized the practice of banks snooping on what activities their customers were involved with through the Patriot Act. It not only allowed, but demanded, that all cash deposits and withdrawals over $10,000 be reported, including transactions structured to avoid that limit but which add up to more than the given amount. Additionally, any “suspicious” withdrawal of more than $5,000 was to be reported.
As a response to terrorism, and considering that most people don’t regularly make withdrawals of that amount, most people didn’t care. However, the structural impacts of this bill enabled the building of the infrastructure and normalization of the behavior for banks to take a more proactive stance in regards to what people are doing with their money. Different laws have further expanded this, including a recently-enacted requirement that third-party payment providers report any aggregate transaction worth over $600.
But, while governments have enabled this proactive stance, they aren’t the only ones pushing their agendas through the banking system.
Banks themselves have been getting politically active in choosing whom they do business with. Some of the largest banks in the world have been trying to dictate who gets to participate in the global financial system and who doesn’t.
In 2012, after doing business with Bank of America for 12 years, Bank of America closed the accounts of McMillan Firearms Manufacturing and related companies because they manufacture firearms. Other gun manufacturers have reported similar treatment. This sort of restriction became an explicit policy at Bank of America and Citi for a while. In 2020, many banks refused to participate in certain fossil fuel projects. This eventually led to the US passing a rule that forbid banks from discriminating by industry.
A similar trend has been seen from crowdfunding sites. GoFundMe, in addition to shutting down funding of the Canadian trucker protest, has similarly shut down funding campaigns by Candace Owens, Christian bakeries, and other groups that it doesn’t like.
While, ideally, businesses should be able to allow or refuse business to whomever they wish, the problem is that the financial industry is what allows other people to engage in business with these people and organizations. In fact, our increased reliance on digital infrastructure is precisely what is giving so many infrastructure providers control over companies based on their ideals. The roads don’t care who you are or why you are using them. The telephone never interrupts your conversation to tell you that the phone company doesn’t like what you are saying. Dollar bills never complain about who they are coming from or who they are going to. However, the increased digitalization of our society means that every interaction winds up being actively mediated by other organizations.
One might think that we should return to less digital forms of interactions. While that might be a good move, law enforcement increasingly views this as prima facie evidence of wrongdoing. Sending someone cash automatically makes one under the suspicion of wrongdoing, and therefore makes the cash subject to seizure and forfeiture (though, if sent through USPS, this would require that they get an actual warrant). Additionally, while not popular in the United States, there has been an international push to forcibly move away from cash transactions.
These sorts of things have fueled a lot of the recent interest in Bitcoin and other cryptocurrencies. It is believed that these solutions prevent governments from stopping transactions and/or tracing money. However, blockchain-based cryptocurrencies are fairly easily traceable, even though no names appear on the accounts. While it is impossible for any actor to remove transactions, and it would be difficult to prevent transactions on the blockchain itself, most people, even crypto miners, don’t do their ordinary transactions directly on the blockchain, but rather through exchanges such as Coinbase, Kucoin, crypto.com, Etoro, and others. These institutions can be easily regulated and directed just like banks, and offer none of the protections that are at least theoretically available when accessing the blockchain directly.
In fact, the IRS is already imposing reporting requirements on crypto exchanges, demanding that users verify their identity or have their accounts restricted. Signed into law in November 2021, HR 3684 extends cash reporting requirements to digital currency exchanges, and those exchanges have already started to require increased compliance. In other words, if you aren’t operating directly on the blockchain, crypto is really no different than any other type of banking.
So, we find ourselves in the situation where large-scale corporate interests control our access even to each other, and attempts to circumvent these are seen by the authorities as direct cause for suspicion. This is not a problem that allows for a technical solution. Instead, it requires that we rethink the shape of our society and its purview over our daily interactions.
Also see:
Is Bitcoin Safe? Why the human side of security is critical. Bitcoin solves a lot of tough problems in very ingenious ways. Unfortunately, however, those benefits don’t tend to translate well for end users. (Jonathan Bartlett)