monetary economics|history of money|central banking|coinage|financial privacy|payments|gold|financial inclusion|cryptocurrency|monetary law|financial crime
It's time to stop staring into the headlights and respond to the fact that Canada is being eyed as a choice morsel by a much larger predator: our former ally the United States of America. In President Trump's very own words , he wants to use "economic force" to join Canada and the United States together. In anticipation of the U.S. turning its economic might against us, we need to locate all the…
It appears to be official now. According to the U.S. Department of Justice, when illicit activity is routed via crypto infrastructure, then it no longer qualifies as money laundering. Earlier this week the Department of Justice's deputy attorney general Todd Blanche sent out an internal staff memo saying that the digital asset industry (read: crypto) is "critical to the nation’s economic…
Stablecoins, a new type of financial institution, are unique in two ways. First, they use decentralized databases like Ethereum and Tron to run their platforms. Secondly, and more important for the purposes of this article, they grant access to almost anyone, no questions asked. I'm going to illustrate this openness by showing how Garantex, a sanctioned Russian exchange that laundered ransomware…
BMO Financial Center in Milwaukee, Wisconsin. Blink twice if you're in danger, BMO. Donald Trump has said he wants to use "economic force" against Canada. In my previous post, I worried that one way this force could be wielded was through Canada's dangerous dependence on U.S.-controlled MasterCard and Visa. But there's an even bigger risk. Canadian banks with large U.S. operations may have become…
We're all busy doing our best to boycott U.S. products. I can't buy Special K cereal anymore, because it's made in the U.S. by Kellogg's. But I'm still buying Shreddies, which is made in Niagara Falls, Ontario. Even that's a grey area, since Shreddies is owned by Post, a big American company. Should I be boycotting it? Probably. However, the disturbing thing is that I'm paying for my…
I have no idea if memecoins like dogecoin and fartcoin should be legally defined as securities, and thus come under the purview of securities regulators like the Securities Exchange Commission (SEC). Securities law is confusing. But what I do know is that the SEC's latest notion that memecoins are simply "collectibles" that people buy for "entertainment, social interaction, and cultural purposes"…
Donald Trump has ordered the U.S. Mint to stop producing the penny because it is unprofitable, costing 3.69 cents to produce each one. In response, the lobbyists that earn big profits from the ongoing existence of the penny have come out in full force with dubious arguments for why the penny is still vital. Their newest bit of disinformation is that removing the penny will increase reliance on the…
Back in 2021, El Salvador became the first country in the world to require its citizens to use bitcoin for payments. Last month, four years later, it notched another record: it became the first country to rescind bitcoin's status as required tender. This backtracking was the result of the IMF's threat to pull billions of dollars in assistance if El Salvador didn't put an end to bitcoin's special…
In what seems to be an effort to extort Canada for additional benefits, Donald Trump complained yesterday on social media that CANADA DOESN'T EVEN ALLOW U.S. BANKS TO OPEN OR DO BUSINESS THERE. And so according to Trump, Canada doubly deserves to be disciplined with tariffs. Well, if it's true that U.S banks aren't allowed to do business in Canada, then why in god's name is one of the U.S.'s…
Noah Smith writes a provocative article about memecoins as a novel mechanism for bribery payments. A foreign dignitary looking to gain influence over Donald Trump would like to pay him a giant bribe, but doing so directly is prohibited by all sort of laws. Luckily, Trump has just issued his own memecoin, TRUMP, of which Trump owns 80% of all coins. So why not just buy the TRUMP token, thereby…
We Canadians are overwhelmingly pro-Ukraine and anti-Putin, so when the CBC published an expose last week about "banned Russian oil" sneaking into Canada, it was read in despair by most of us. What an awful failure of Canadian sanctions policy. As with a lot of sanctions media coverage, I saw things a bit differently: "Not bad. We're doing our part!" That's because if you add some more context to…
Source: Better Business Bureau The daily news is filled with personal stories about bad experiences with banks. Here’s a recent example . In November 2024, a charity inadvertently accepted a fake check from a would-be donor. The charity's bank allowed the charity to deposit the check, crediting it with the funds. A few days later the bank discovered the fake, but only after the charity had…
On Twitter/X, I recently suggested that the network effects of the stablecoin market are massive. Tether, which has four times more wallets than all other stablecoins, is locked-in as the stablecoin lingua franca, just like English has been locked-in as the global language of business. In case you've missed the trend, stablecoins are fiat money (primarily U.S. dollars) that are issued on a new…
There's a chart that has been circulating for a while now on social media that shows payments traffic on SWIFT, a key global financial messaging network. Below is a version from the Economist , but I've seen other versions too. Source: The Economist When banks make cross-border payments between each other, say euros to dollars, they need to use a communications network to coordinate the debiting…
What follows is an essay on how my thinking on bitcoin has changed since I began to write on the topic starting with my first post in October 2012. Since then I've written 109 posts on the Moneyness Blog that reference bitcoin, along with a few dozen articles at venues like CoinDesk, Breakermag, and elsewhere. An early bitcoin optimist I was excited by Bitcoin in the early days of my blog. The…
When we first learn about money and banking in high school or university, we are all taught that money has three functions: medium of exchange , unit of account , and store of value . Maybe it’s time for educators to throw out this triumvirate. It’s not very accurate. We need a simple and teachable device to take the triumvirate’s place. I propose the money Venn diagram. Before I explain the money…
The next chapter in the Tornado Cash saga just dropped. Last week a court ruled last that Tornado Cash, a bot that can be used for obfuscating crypto, is safe from being sanctioned. I first wrote about Tornado Cash in 2021 , before its legal troubles began, warning of the risks ahead. I've been tracking Tornado's legal saga since then. (See here | here | here ). The saga serves as a bellwether for…
I began exploring the topic of financial privacy and payment anonymity in the early days of this blog. Over the past decade, my views have shifted significantly—here's how and why. Rereading my earliest mentions of financial privacy, they now seem a bit... idealistic? extreme? For instance, in my 2014 post entitled Fedcoin , a central-bank issued digital currency, I suggested that the product…
Banknotes are useful. Not only do they provide their owner with a standard set of payments services, they also offer financial anonymity. This post introduces the idea of trying to price the anonymity component. To help think about why we might want to price anonymous banknote usage, I’m going to make an analogy. Imagine Walmart sells special suits that allow people to become invisible. While most…
On the last day of 1945, with World War II finally behind it, Finland's government announced a new and very strange policy. All Finns were required to take out a pair of scissors and snip their banknotes in half. This was known in Finland as setelinleikkaus , or banknote cutting. Anyone who owned any of the three largest denomination Finnish banknotes — the 5000 markka note, the 1000, or the 500 —…
Cypherpunks wanted to change the world. We ended up with memecoins. Our story begins with some very smart and idealistic developers, known as cypherpunks, creating a new technology know as a blockchain . Blockchains are databases, but decentralized. Advertised as being "censorship-proof," they reduce the possibility of users being subjugated to third-party interference. Cypherpunks have always…
The Swiss 10-centime coin has a lot to teach us about monetary economics. On its face, the Swiss 10-centime (rappen in German) looks like a pretty unremarkable coin. It's the second-lowest value Swiss coin, the Swiss version of America's lowly nickel, the sort of coin that many people might prefer to throw in a jar and forget about. But I recently learnt via @alea on Twitter that the 10-centime…
Ed Conway of Sky News recently published a very good investigation on sanctions evasion being carried out through the Caucasus. He visits the Lars border crossing between Georgia and Russia to document how smugglers are openly moving British and German luxury cars into Russia, in contravention of sanctions on Russian luxury car imports. In a subsequent interview , Conway describes this as the the…
Everyone agrees that money laundering laws apply to DeFi. The question is: how to apply them? DeFi, or decentralized finance , is an emerging segment of the broader financial industry that delivers traditional financial services, say like trading or lending, using a novel type of database — blockchains. These blockchains allow people to create financial robots, or bots , that the public can engage…
Before anti-money laundering laws arrived in Switzerland, anyone could walk into a Swiss bank and open an account without showing any ID. The bank would then issue you something called a bearer savings book , otherwise known as inhabersparheften or livrets d'épargne au porteur . Ownership of the savings book was considered by the bank to be proof of ownership of the underlying funds in the…