In a world that is becoming more digitized, it’s important to stay vigilant about your privacy, and mindful of the kinds of regulations brewing.

September 27, 2021

By: Bobby Casey, Managing Director GWP

privacyIt’s as if a rock has been lifted and all sorts of critters are crawling out. I see these headlines come across my feed and wonder: are they warning us about this or are they celebrating it?

At first, they might seem unconnected or inconsequential, but I’ve come to realize that there is nothing inconsequential about anything the government does.

Here are a few things I’ve seen, that have my eyebrows raised a bit:

Digital Asset Market Structure and Investor Protection Act

That’s a mouthful. Pretty easy to deduce that it has something to do with cryptocurrencies. And because it’s a bill, it’s something to regulate them.

It’s a 58-page bill that seeks to create a framework for regulating digital currency. According to its author, Representative Don Beyer of Virginia, this is “legislation that would protect consumers and promote innovation by incorporating digital assets into existing financial regulatory structures“.

No discussion of crypto in a political context would be complete without some discussion about the fraud, theft, manipulation, and malfeasance by criminals who would launder money.

To which I would ask: how is that any different from fiat currencies? How is quantitative easing or money printing on a whim any different from theft, manipulation, and fraud?

Despite the existing regulations in place for fiat currencies, there’s nothing regulating the Federal Reserve or any central banks. Nothing regulates civil asset forfeiture either. In fact, there are more loopholes than controls with the federal equitable sharing program which preserves the policing for profit motive.

The regulations aren’t to protect anyone from the central bank. Quite the opposite, actually. There’s a considerable amount of definitional distinctions with regard to what is “money” and what is a “security” in the crypto space as well as clarity on which federal agency oversees what. It regulates you and me, it regulates brokers and middle men, it regulates the crypto asset itself, but it empowers the Federal Reserve even more:

Provide the Federal Reserve with explicit authority to issue a digital version of the U.S. Dollar, clarify that digital assets, digital asset securities and fiat based stablecoins are not U.S. legal tender, and provide the U.S. Treasury Secretary with authority to permit or prohibit US Dollar and other fiat-based stablecoins.

And the US isn’t the only one! Check out England:

The Bank of England has called on ministers to decide whether a central bank digital currency should be “programmable”, ultimately giving the issuer control over how it is spent by the recipient.

Of course only the benefits are being discussed. Imagine parents being able to restrict how their children use money so they don’t go wasting it on sweets! Oh, okay.

Then it goes to: imagine being able to issue welfare and ensure they only buy certain essentials that the money was meant for? Um… okay?

But no one talks about how the money could be directed by the central bank itself to prevent people from leaving inheritances. Or to keep people from investing in certain things. Or to seize it if spent on things they deem “socially harmful”.

Speaking of seizing stuff from unsuspecting individuals…

Government Seizing Messages from Big Tech

I mentioned last week the expose by Propublica about Facebook and WhatsApp sharing private user messages with government agencies.

But how far does this go exactly? And when do you get to know about it?

Typically, if the government wanted to search your home, they would need probable cause, and a warrant specifying what they are looking for and where they can look.

With digital searches from these tech platforms, not so much. Rather than a warrant, they get an subpoena:

Under the 1986 Electronic Communications Privacy Act, federal prosecutors are required to seek digital information from tech companies, not their customers. Since then, prosecutors have routinely used gag orders to prevent the companies from spilling the beans to suspects who might destroy evidence, go into hiding or threaten someone’s life.

With a warrant, it authorizes a search where a government official goes in and searches something that belongs to the accused (like a car or house) for something that belongs to the accused (like a weapon or evidence).

With a subpoena, it authorizes that someone provide something: sometimes a testimony, but in this case information about users that they store on their servers. They are requesting information about the accused but it’s not located on something belonging to the accused. It’s located on a server that belongs to a third party.

Sneaky.

What’s worse is that these tech companies don’t tell users it’s happened or is happening. But we know it’s happening quite a bit:

In the last six months of 2020, Facebook received 61,262 government requests for user data in the United States, said spokesman Andy Stone. Most — 69 percent — came with secrecy orders. Meanwhile, Microsoft has received between 2,400 and 3,500 secrecy orders from federal law enforcement each year since 2016 — or 7 to 10 per day — according to congressional testimony by VP of Customer Security and Trust Tom Burt.

Google and Apple declined to disclose the number of gag orders they’ve received. But in the first half of 2020, Google said U.S. law enforcement made 39,536 requests for information about 84,662 accounts — with many of the requests targeting multiple accounts. Apple said it received 11,363 requests.

From Google’s Director of Law Enforcement and Information Security, Richard Salgado

These nondisclosure orders are issued more routinely than makes sense.

This isn’t just Facebook. This is across platforms. These subpoenas are vague in nature. The platforms don’t know the nature of the investigation: is it to track a suspected murderer? Or is it to railroad a reporter? Without knowing, it’s difficult to push back.

Be careful out there, folks. Remember, it was the government that poisoned the alcohol during Prohibition, not the moonshiners.

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