Uncle Sam Could Soon Know Every Single Transaction You Make

America’s doing it. 

The Brits are doing it too. 

In fact, many countries are doing it. 

Which can only mean one thing: It’s a done deal. 

The deal that’s done? 

Moving to regulate stablecoins, cryptocurrencies that are built to tightly track an underlying asset, typically a fiat currency like the U.S. dollar. The aim is to create a crypto token that basically moves in tandem and with the same limited volatility as regular currency. 

All of this is relevant for two larger reasons:  

1. It says crypto is here to stay, despite the bleating of naysayers.  

2. It’s a sure sign we’re a few short steps away from governments’ ultimate goal: central bank digital currencies, so-called CBDCs, that will replace physical bills and coins. Which means the U.S. dollar as we know it is soon to disappear… 

Just this month, various news stories have emerged to note that in the U.S., certain lawmakers are pushing to get a bill introduced before the summer recess that would regulate stablecoins. Meanwhile, over in the U.K., the government introduced the Financial Services and Markets Bill that would have the kingdom’s Treasury regulate stablecoins. 

Along similar lines, the European Union and the G-20 countries (lots of overlap there) are moving to create coordinated stablecoin regulations as well. 

The reasoning behind these efforts is the simple fact that governments not only understand that crypto is a permanent part of the financial landscape now, it wants crypto to survive because crypto offers the most valuable resource on the planet…information! 

The reality is that blockchain—the technology behind bitcoin and all other cryptos—is basically the Eye of Sauron from The Lord of the Rings.  

It. Sees. Everything! 

The blockchain is effectively a giant whiteboard in the sky on which every single transaction and interaction is recorded for the remainder of history.  

When that blockchain is controlled by a decentralized system as with bitcoin, it can offer a degree of anonymity (though even then, the U.S. government on several occasions has tracked down cyber criminals who were using existing crypto networks). 

But when the government controls the blockchain, it can see all. It has a complete, permanent record of every transaction you ever make.  

Because of this reality, government adores the blockchain. 

Which is precisely why government wants the blockchain to exist, and why countries are moving toward CBDCs. 

We are moving toward a reality in which payments and expenses will be transacted entirely in electronic dollars, a CBDC greenback. Real dollars—those green and off-white linen-and-paper dollars in your wallet—will cease to exist. They’re costly to produce and hard to track. 

Far less costly to “print” electronic money that exists in the digital either. And far—far!—easier to track.  

Government, should it care to look (and you know it will care), will have the capacity to see exactly how much money flows into your digital wallet, and from where…and exactly how much flows out of your digital wallet, and to where.  

Clearly, that’s a disturbing notion. Government will have that Eye of Sauron power to see every little thing you do.  

It will know your tax obligations before you do. It will know the stores you shop in, probably even the merchandise you buy.  

Which means it would know the medicine you’re taking… it would know every time you loaned $100 to a friend… it would know every gift you buy for a loved one… 

All of which rightly raises a massive concern about privacy.  

Imagine a world in which the government knows every single thing about your financial life. 

Frankly, that’s a bridge we’ll have to cross later.  

For now, what I can say is that government realizes it has a privacy fear to address. I can also tell you that there are cryptocurrencies such as Zcash and others that are privacy focused, and will very likely become increasingly popular. 

As well, there are effectively cryptocurrency “washing machines,” whereby you deposit your crypto from one wallet, and it’s all jumbled and comingled with other crypto, and then spits out into other wallets largely undetected.  

Will all of those ultimately be outlawed? Or will government turn a blind eye to them to some degree, recognizing that it might be the only way to adequately address societal fear about a loss of financial privacy in a CBDC world? 

I don’t know the answer to that at the moment.  

But that CBDC world is a lot closer that lots of people imagine.