[kaycebasques]

MacroVoices #255 with Mike Green discussed another regulatory threat not mentioned in the Bridgewater post. Governments don't have to ban BTC outright. They have other tools for making it wildly unattractive to hold. I can't remember the details but they discussed a scenario where the US government classifies BTC as a commodity and requires K-1 style taxation. That would mean that you would have to pay taxes on any gains in BTC even if you haven't sold your shares.

[ttul]

Absolutely. Governments have the power to make things unlawful or taxed even if you have ways to keep that activity secret. Sure, you can pay your builder cash to finish that deck, but it’s illegal. Making things illegal or taxed suppresses that activity.

[coinward]

How will they confiscate those BTC gains? They are literally relying on an honor system to report holdings today. Maybe this will change and they will come after those who are suspected to be holding BTC due to purchase records from KYC compliant services that IRS could get their hands on. Then what? Show up with their guns to coerce you or throw you in a cage until you fess up? The tax code mess becomes totally impossible post hyperbitcoinization. Bitcoin frees the tax slaves. You thought abolition was just for history books?

[kaycebasques]

It's just an example and I'm not invested enough to defend it. The main idea is that governments have a lot of levers to add friction (as Consultant32452 said) and if you think that governments are just going to peacefully concede their ability to control something as fundamental as money to the crypto illuminati, you might be in for a surprise.

Another possible lever is government control over regulated financial institutions.

[coinward]

How much power do you think governments have over central banks? Bitcoin is definancializing money, so those levers lose efficacy with Bitcoin's adoption.

[Consultant32452]

I agree with you 100%. The phrase I like to use is "friction". All the central banks/governments have to do is apply some friction and it will stop BTC from becoming a defacto currency. They have already started by calling BTC an asset. This means if you get some bitcoin and then spend it, you have to log that on your taxes as capital gains/loss. This is already going to be too troublesome for regular people. They killed BTC and the crypto community doesn't even know it.

[playingchanges]

Mike Green is one of the most interesting thinkers in the finance space. His work on passive indexation is fascinating.