Comment by cherryteastain
Comment by cherryteastain 16 hours ago
Sending money without government interference to relatives living in countries with strict foreign exchange controls (Argentina, Lebanon, Turkey...) is one quite legit use case.
Comment by cherryteastain 16 hours ago
Sending money without government interference to relatives living in countries with strict foreign exchange controls (Argentina, Lebanon, Turkey...) is one quite legit use case.
Kleptocrats, dictators and warmongers have been around for way longer than crypto. If sanctions worked, the likes of Kim family or Iran's ayatollahs would have fallen in the 90s or 2000s.
Crypto allows my family members to bypass arbitrary restrictions set by one such kleptocrat right now so the benefit is very much more than marginal.
They had to transfer gold, US dollars or other physical assets to finance their operations before which made them significantly more vulnerable and restricted. Sending crypto to your family is a temporary solution to the problem of the kleptocracy economically handicapping their capacity to generate and retain wealth. Crypto enables the kleptocrat to transfer the wealth they steal from their country internationally with a significantly lower transactional cost and at significantly higher volume.
By sending your family money, as crypto or US dollars, you have to assume some percentage of that money is going to end up in the kleptocrat's pocket. If the funds are eventually settled through official exchanges in the country, its very likely that the government gets a cut of the exchange transactions. If its being settled by unofficial exchanges like street exchange vendors, those individuals probably pay some bribe or tax to operate that eventually makes its way back to the kleptocrat. Additionally you are offering the kleptocrat increased liquidity by operating with crypto. Assume the kleptocrat is the largest buyer of cryptocurrencies in their country.
Let's not assume foreign exchange controls are always bad. Not saying they are not ... in some cases
Unfortunately to governments and law enforcements that looks identical to organised crime and terrorists sending money.
All three of those countries have restrictions/regulations on converting crypto currencies into local currencies - doesn't crypto just move the the problem to converting it to local currency?
When it comes to receiving USD, EUR etc these countries do not tend to have restrictions, as the point of forex restrictions is to keep capital in the country. Hence, these countries are usually quite lax about KYC/AML stuff because they want hard currency inflows, wherever it's sourced from. The utility of crypto comes in when
1. You want to convert the "hard" currency into the local currency
2. You want to convert the local currency back to the hard currency
3. You want to send hard currency back
Often there are official rates set by the central bank in these countries, and then there are black market rates. Banks etc will convert hard currency to local currency only using the official rates, which tends to be a lot lower than the black market rate, so you get shafted by that in the first instance. Then, when you want to convert the local currency back, banks won't sell it to you because the government does not let them sell hard currency to the general population. Finally, sending hard currency abroad is usually de facto (and sometimes also de jure) banned so your money can't leave the country once it's in. And as a last resort if you say screw you I will withdraw e.g. USD notes and take a flight, banks will refuse to give cash hard currency.
Obviously crypto lets you sidestep all that as nothing can prevent you from sending USDT from your wallet.
Legit from whose perspective though? Around an authoritarian government maybe widely viewed as reasonable/justified, but doesn't sound legitimate to those governments
To some particular psychopath out there, I’m sure murder seems fine.
> is one quite legit use case.
While it is useful for this case, it is not 'legit', in that its purpose is to by-pass (break even) laws of the country with the capital controls. In that sense, money laundering is also a legit use-case.
Cryptocurrency also empowers kleptocrats, dictators and warmongers to bypass sanctions and international banking controls, making it more likely that politically and economically oppressive states will thrive and persist for longer. The benefit to the individual is marginal compared to the benefits to actors that might limit that individual's other freedoms. Also, foreign exchange controls aren't the only form of taxation and there's nothing stopping governments from increasing taxation on something else to make up the difference.
Most arguments for cryptocurrency are just as weak as this one.