Comment by elif
13 hours ago
I'm confused how the connection was made between "here are our guidelines for suspicious activity" and "self custody is outlawed"
13 hours ago
I'm confused how the connection was made between "here are our guidelines for suspicious activity" and "self custody is outlawed"
It can be hard to figure out exactly what is outlawed with banking interactions. It seems a lot of the KYC/AML stuff is based on industry best practices and guidelines. There's no law you need a state ID with address to open a bank account, but when I tried to open up a bank account without an address I found it basically impossible. The bank will then cite that these practices are what they're held to as law, because the law itself is vague and relies on more nebulous customs.
So what is called "guidelines" one day becomes legally binding later with no act of congress.
Unfortunately there's a massive swath of mere guidelines and regulation that end up having legal binding. For instance, a Navy sailor was recently sent to jail for 20 years for having gun parts that were cut up the wrong way, the "wrong way" being the right way with previous mere guidance and the wrong way apparently being the fact that some time since then the guidance changed but not the law.
That's the whole point. They can't overtly outlaw things because aggrieved parties would sue and win. So they soft outlaw them with expensive record keeping requirements and ambiguity because no business big enough to win but smaller than a giant mega-corp will intentionally risk going toe to toe with the government in court as doing so would likely be financially ruinous.
And even if the government doesn't look like it's disposed to do that in your situation you're still sticking your neck out by deviating from the herd because then you can't screech "standard business practice" when some contrived chain of facts results in you fending off a civil suit for whatever reason.
This isn't just a banking thing or a guns thing, you see examples in every industry once you know the pattern.
As long as the government only tazes your dogs and ruins your business, you can't even sue against the law even on constitutional grounds.
See Knife Rights V Garland. []
No one had been convicted in the past 10 years for violating the switchblade act, so the state ruled the law couldn't be challenged ("no standing"), even though it was actively being used to ruin people's businesses and raid their homes (the government would just give everything back a few years after doing so and not go through with charges).
[] https://kniferights.org/legislative-update/court-opines-feds...
1 reply →
See this very nice blog-post: https://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-th...
It explains how KYC and AML law function as a stochastic control on crime. How that is difficult to do through actual laws, and what the downsides of this system are.
De facto vs. de justo
De jure.
> creating and using single-use wallets, addresses, or accounts, and sending [cryptocurrency] through such wallets, addresses, or accounts through a series of independent transactions
One could argue that's how normal Bitcoin wallets work. The addresses are deterministic based on your passphrase (or derived private key). The addresses don't need to get reused because there's no real value in doing so, and no real cost of just using a new address each time.
Though yes--even if that's the exact meaning and design, presumably one could still use the simpler wallets that DO just reuse the same address over and over. And obviously that'd reduce privacy quite a bit.
Yes. Single-use addresses protect me. If you store your entire balance under a single address then anybody you transact with can see your entire balance by lookup up the transaction. Single-use addresses protects you from people snooping around looking for worth while $5 wrench attacks.
What you quoted is regarding the use of a SERIES of single use wallets. What is the "normal Bitcoin" use case for funneling money through a chain of throwaway wallets?
The quote is "single-use wallets, addresses, or accounts." If you download any normal Bitcoin wallet today, it'll use a series of words to derive a series of private keys that are used by the wallet. Each one gets a different address.
Then your wallet software is smart enough to treat all the addresses derived as a single wallet. When you go to make a payment, it makes it from the various addresses owned by the wallet. When you want to accept money, you can generate the next address in the series and give a fresh address to someone new.
The net result is that it's not clear from someone looking at the blockchain which addresses actually belong to YOUR wallet and which transactions are you sending money to someone else or yourself.
AFAIK this is how basically all Bitcoin wallets have worked for years. Electrum and Base (formerly bread wallet) as well as Ledger's wallet are the main ones I've used.
EDIT: Just to address this:
> What is the "normal Bitcoin" use case for funneling money through a chain of throwaway wallets?
It makes it so that someone publicly looking at the blockchain can't provably tell how much Bitcoin you have.
We still have to give addresses to people to receive money, so if we were only allowed to have a few, it wouldn't be hard to trace which people own which wallets. And then now you've got a big physical security risk because the world can see how much money you are able to give if they invade your home, kidnap a family member, etc. It'd be like having to put a sign out in front of your house that says, "$600,000 in cash is in here." And they could see the cash.
2 replies →
People are interpreting the ‘and’ here as meaning ‘either of these things’ rather than ‘these things in sequence’ as you (and I) do.
this is just standard practice
optionality
Because just about all those practices are what reasonable users of the protocol would do, and making your transactions 'suspicious' is synonymous with all the big players refusing to deal with you. It's a way of prohibiting behaviour outside the force of law, which is even more insidious.