Oh, wow. I totally trust the Secrat Service on this. It's crazy that all blockchain has the same, breakable, model. I'm sure Monero is shaking in its boots.
this post was submitted on 17 May 2023
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I think what they really mean is that once these coins finally land in some unwitting bagholder's account, they can use legal means to seize the value of that coin from the person left holding it.
It's actually kind of terrifying - imagine if they could come to your house and slide some bills out of your wallet that were once previously stolen. What could you even do? It's one thing if you buy a bike second hand without knowing it was stolen first - most adults know that second hand bikes are routinely stolen and resold for cash, and buying one without clear provenance is a risky endeavor, but it's another when they can track the movement of money and lay culpability at your feet - something impossible to do with cash, but possible with the inherent transaction ledger, and which you are probably not expecting to occur.
most adults know that second hand bikes are routinely stolen and resold for cash, and buying one without clear provenance is a risky endeavor,
If police come after you because you bought a used bike, you already live in a police state. Most of the world isn't like that.
They aren't coming for you, they're taking the bike off you. So now you're out $MoneyDollars and you don't even have a bike to show for it.
Luckily police in my country doesnt have time to go around stealing bikes.
This assumes tracability of the coins, which would necessitate eliminating anonymity, which is a bold claim.
Governments have battled the use of zero-knowledge crypto for anonymity before, and they were kind of successful in their goals.
Consider Tornado Cash, a protocol / Ethereum contract that uses zero-knowledge proofs (zk-SNARKS) to obscure the trail of crypto transfers to provide privacy, by breaking the link between deposits and withdrawals, while requiring proof that withdrawals don't exceed deposits for a keypair / account (similar to Monero's Traceable Ring Signature based approach but more generic).
It has legitimate purposes - without it, the pseudonymity of Ethereum is not very private - if someone pays you in crypto, they can work out what you spend it on, and people who you spend money with can easily work out where your money came from and what you spent it on. So protocols like Tornado Cash don't give anything too radical - just privacy similar to cash, that normal ordinary people should use as a matter of course. Of course, it is dual purpose as it is also useful to criminals.
The US government sanctioned the protocol / smart contract, and the developers (https://home.treasury.gov/news/press-releases/jy0916), making it illegal for businesses within the reach of the US government to do business with anyone in relation to funds that have passed through the protocol, as well as shutting down hosting of project resources. Dutch authorities arrested Tornado developer Alexey Pertsev and held him for almost a year just for developing the Tornado Cash protocol and software implementation.
There are serious questions about the legality of both the US and Dutch actions - US sanctions law is apparently supposed to be about sanctioning people and organisations, not technologies, and arresting (or sanctioning) people solely for designing something with legitimate purposes because someone else used it for illegal purposes is not the status quo. If that is really the precedent, the US should designate any design of firearm which is used in a homicide as a 'sanctioned entity', so that anyone touching one is guilty of interacting with a sanctioned entity. But for now, Tornado Cash is essentially unusable.
Yes, and full tracability might come with the CBDC.
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