Patrick McKenzie

And I'm not proposing to use the Redstone emulated computer in Minecraft to be the next computational infrastructure for the world, because that fairly obviously will not work very well.

So I'm actually much more sympathetic to crypto people in this focus than I expect most people who have a traditional financial background to be.

I think it is descriptively accurate that the banking system and all companies which are necessarily tightly tied to the banking system

which might be all companies, let's come with a central example so that's second set first, are a policy arm of the government.

And I think whether people articulate that in exactly those words or not varies a little bit, but when you have your mandatory compliance training, you'll be told in no uncertain terms that you are a policy arm of the government.

And I feel for crypto folks that say that things like this feels like, you know, warrantless search and seizures of people's information and like very undirected dragnet fashion.

And some somewhat complicated thoughts about this.

So the modern edifice of know your customer KYC and AML anti-money laundering dates back to the BSA Bank Secrecy Act in the United States, which was late 1970s, early 1980s.

And at the time, the

Federal government in the United States was like strictly rate limited in how much attention it could give to KYC and AML.

And so maybe because we thought we had very limited state capacity at the time, like the government would make rational decisions and maybe it will go after like 10 or 100 enormous white collar crooks and drug trafficking cartels a year and not surveil down to literally everyone in society.

But the regulations we wrote and have continued to write and have continued to tighten on over the years do effectively ask for, like, transaction-level surveillance of every transaction that goes through a bank.

And so it is the actual practice, and this is not a conspiracy theory.

I'm making nothing up, folks.

This is, like...

acknowledged that the actual practice in banks is that they have descriptively about as many intelligence analysts as the American intelligence community has who get this scrolling feed of alerts that are generated by automated systems and for each alert they either go don't worry don't worry don't worry don't worry don't worry don't worry don't worry millions of these alerts every day and then for some tiny percentage they say oh dear

This one might actually have been a problem.

I'm going to write a two to four page memo and file it with the Financial Crimes Enforcement Network.

And in all probability, no one is ever actually going to read that memo.

But we have like an intelligence community sized operation running in banks to write memos that no one ever reads.