Exactly one year ago, President Biden editorialized in the Wall Street Journal that we should unite to protect our privacy and introduce more competition into our tech sector. (WSJ January 12, 2023).

He wrote that the risks are clear, and that our most personal lives and data are at risk. We all know this: what we buy, financial affairs, where we shop, our political views and contributions, our health and genetic data, what we read, reproductive decisions and sexual preferences are all at risk. The President went on to write that he has a vision to promote competition and remove barriers to market entry, as a path to American innovation and entrepreneurial growth. 

Worthy goals, indeed.

Unfortunately, a duplicitous hypocrisy appears to be at work here, the pot calling the kettle black as it were. The government has become the most egregious violator of our right to privacy.

For example, last year, the FBI made over 3 million warrantless searches of NSA data. Over 150 million money transfers were searched without judicial oversight or approval by over 600 law enforcement agencies.

The FISA Court reports the FBI misused its authority to search banks and other data sources in thousands of instances last year alone.

Right out of an authoritarian playbook, the Biden administration is pressing for the passage of the “Enablers Act” , to require lawyers to breach their confidentiality obligations and report financial information about their clients. The Putin Administration recently revived the Stalinist era “donos” policy of encouraging citizens to denounce and snitch on those with disfavored views. Coincidence?

Why is Team Biden clamoring for a solution in search of a problem? Are they looking to achieve an unstated goal? Or is the goal clear: to know and regulate the private and financial affairs of every American?  The entire Biden administrative state is marching in a coordinated lock step to develop a regulation scheme for stablecoins, to augment the misnamed Bank Secrecy Act (BSA), to require the reporting of personal ownership of every corporate entity in the country, and simultaneously create a government stablecoin, a Fedcoin.

President Eisenhower might have called this the Deep State- Law Enforcement Contactor Complex.

Yet, a unique opportunity exists right now to balance various needs and constraints. Why won’t the President show the same initiative to reign in these federal abuses as he wrote in his editorial? He and Congress should use the occasion of the potential modification of “Section 230” (Tech immunity), the expiration of “Section 702” ( NSA surveillance) , and the effort to regulate private entrepreneurial stablecoins as an opportunity to greatly reign in these systemic intrusions into our privacy.  

In fact, is it time to reexamine the entire Bank Secrecy Act scheme?

The Department of Justice (DOJ) possesses the power and technical ability to catch cyber and financial criminals, and yet still respect the mandates of the Fourth and Fifth Amendments. It needs to be vigilant to protect the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.

When I was Director of what is now called the DOJ Money Laundering and Asset Recovery Office, we felt we were the white knights when enforcing the then handful of laws passed to fight the drug cartels and terrorists. Certainly no convicted criminal should be allowed to keep the fruits of their crimes.

However, these few crimes have now morphed into over 400 Federal civil asset forfeiture laws, confiscation without conviction.. Over two million Americans are employed in “compliance”, spying, and mandatory reporting to the government on other Americans about financial matters. Tens of thousands of federal agents and enforcement personnel are employed in this endeavor.

In a recent research paper, the Cato Institute reports that “The evidence shows that this regulatory framework has not appreciably reduced criminal activity.”

It is often said that it is better to acquit nine wrongdoers than erroneously convict one innocent person. Yet we have created a huge apparatus of informers and spies to catch a few boogeymen. As Mr. Turku Varadarajan wrote in the WSJ,  ” The right response isn’t to dilute privacy. It is for the authorities to be alert to crime.” What privacy and freedom do we have if our assets are only held at the whim of the government, if they know everything about our “papers and effects”, and can freeze and confiscate them without a warrant or conviction?

Indeed, after watching Justin Trudeau block funding of the Truckers Strike, we better understand that he who controls your purse, controls your freedom.

Taking a cue from what China is now doing with the digitalization of their money, the Treasury has advocated to ban $100 bills , and is developing the framework for a digital crypto dollar, a “FedCoin”. With this, all monetary transactions and money movements will be subject to government monitoring and abuse.

Discover Card has started to track gun store purchases. For what purpose? Perhaps to start to develop a Chinese like “social score” algorithm?

Let us take a fresh look at privacy in the context of stablecoins, and how to foster a new, dynamic, creative, and green industry with governmental interference. 

Not heeding the recent counsel of the Supreme Court to curtail Administrative overreach, the SEC has launched a “Room 101”  initiative to force the crypto industry into the unauthorized and inappropriate constraints of a 100 year old law. Throwing down the gauntlet, the powerful and outspoken head of crypto exchange Coinbase, Brian Armstrong, has challenged this overreach in Federal Court. 

Many were shocked that a respected and accomplished businessman such as the late  Charlie Munger would write that we should ban cryptocurrency , and “thank the Chinese communist leader for his splendid example of uncommon sense.”

This Chinese leadership has resulted in the introduction of a Chinese governmental stablecoin, a Digital Yuan, which is to eventually replace all paper money. All transactions will be monitored, a “social credit” score given to citizens, all of their purchases known and tracked, and, at the whim of the Party, anyone’s money can disappear. President Biden has directed the Federal Reserve and Treasury to explore creating a Digital Dollar stable coin. So we can be more like China? 

Authoritarians, whether called fascists, socialists, progressives, or communists, seem to share a need and compulsion to force their designs on others. Control of speech, assets, purchases, contributions, gas stoves, and reading materials is central to implementing their grand designs. They forget that, in America, the ultimate sovereignty rests in each individual, that government is the servant, and not the master. Hence, the Bill of Rights, and the entire privacy penumbra of the Constitution.

Minneapolis Fed Chairman Neel Kashkari said about a U.S. Digital Dollar, a FedCoin, “If they want to monitor every one of your transactions…you can do that with a central bank digital currency. I get why China would be interested. Why would the American people be for that?”

True stablecoins, 100% backed by dollar deposits at the Fed, are not a threat to stability and freedom, although of course they are a huge threat to the jobs of bureaucrats and deep staters who seek to regulate your financial affairs.

We already have laws which punish criminal activity, such as occurred at FTX. What we need is not more regulation and laws and bureaucrats and T-Men, but a system that allows small and creative entrepreneurs and individuals to innovate in the world of stable coins, blockchain, and crypto without bureaucrats interfering at every stage.