Close X Cookies are necessary for the proper functioning of By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
In the same category

Bitcoin and the Rebirth of Financial Safe Havens

IMG Auteur
Published : May 01st, 2013
923 words - Reading time : 2 - 3 minutes
( 2 votes, 3/5 ) , 1 commentary
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...
Category : Editorials

Like never before, financial privacy and safe havens are under attack the world over.

Banks and even entire jurisdictions are feverishly responding to increased government scrutiny from the world's monetary power centers in the name of exposing political corruption, combating terrorism, and preventing tax evasion.

Full financial transparency is the new mantra and it's being invoked in the name of social justice. The International Consortium of Investigative Journalists recently released
"Secrecy for Sale: Inside the Global Offshore Money Maze," a report that focuses on "exposing hidden dealings of politicians, con men and the mega-rich."

But why are private individuals lumped together with politicians who choose to be public figures representing the interests of their constituencies? Should private individuals and political figures be treated in the same manner regarding financial privacy?

Attorney Jenice Malecki of
Malecki Law told me: "No, they should not. When you become a political figure, you agree to give up some of your privacy rights. You also need to be more transparent, so people know who you really are, whether they should believe what you say."

Politicians who do not voluntarily submit to monitoring of their financial activities will not be trusted.

"Private individuals should have more privacy, as they have not placed themselves into the political arena. They have not agreed to give up their privacy," adds Malecki. However, she also concedes that when it comes to offshore numbered accounts, "it does seem that banking secrecy is eroding. Slowly, but surely, banks are releasing information for governmental investigations."

Violations of everything from know-your-customer rules to the
Foreign Account Tax Compliance Act  can all be loosely categorized as the politically incorrect crime of money laundering. But as the investor and author Doug Casey says, "it's a completely artificial crime. It wasn’t even heard of 20 years ago, because the 'crime' didn’t exist." Moving money around was simply called banking. Furthermore, Casey says, "The war on drugs may be where 'money laundering' originated as a crime, but today it has a lot more to do with something infinitely more important to the state: the War on Tax Evasion."

Almost simultaneously with the recent jihad against tax dodgers, decentralized cryptocurrencies such as
bitcoin arrived on the scene in early 2009 and now provide an outlet for personal wealth that is beyond restriction and confiscation. The exchange rate for government fiat currencies may be volatile now, but as the market price eventually finds equilibrium and stabilizes, bitcoin will become an important store of value.

Think of bitcoin as your own personal financial safe haven or offshore bank. Previously, you had to board a jet or hire an attorney to set up legal entities and open bank accounts in private banking jurisdictions like Liechtenstein,
Luxembourg, the Cayman Islands or the Cook Islands.

Simply by leveraging the distributed bitcoin
block chain, which records all transactions in the system and prevents double-spending without identifying the parties by name or location, individuals can protect their wealth from privacy violations and indiscriminate confiscation without leaving the keyboard. This represents a powerful new development that the world has not seen before and it will have a profound impact on the global asset management industry specifically.

Today's best tax havens combine a no-tax jurisdiction with extreme banking secrecy enshrined in law where bank employees could face imprisonment for disclosing bank customer details to third parties or parties outside of the bank. Unsanctioned disclosure of bank account information in most tax havens is considered a criminal offense punishable by incarceration and monetary fines.

Sanctioned disclosure usually requires a recognized court order and typically hinges on the distinction between legal
tax avoidance and tax evasion. Offshore jurisdictions have been feeling the pressure for several years to remove that distinction and open the banking records regardless.

The global trend persists toward cleaning up the high-risk and uncooperative countries on the intergovernmental
Financial Action Task Force’s blacklist. Ultimately, no jurisdiction will be exempt. On the complementary Organisation for Economic Co-operation and Development gray list, the tiny alpine principality of Liechtenstein has been amending tax laws in a move to anti-secrecy compliance. Similarly, as the small haven of Cyprus had built up a burgeoning financial center for the free flow of capital within the eurozone, it too had to be restrained, even if that meant egregious depositor "haircuts" of up to 60%.

Future regulatory and confiscatory
attacks on safe havens and banking secrecy will become irrelevant, because bitcoin provides for a personal "offshore center" under direct and sole control of the individual. However, Malecki cautions, "If [the] bitcoin currency's respect and security grows, the governments will also find a way to keep on top of bitcoin monitoring and enforcement.

"I think that determining 'legitimacy' is difficult," she says, "but as with political asylum, perhaps the financial world needs some financial asylum – which has very specific criteria, review and oversight. Without that, there is bound to be abuse" by governments.

Legitimacy is a politically charged term. One person's legitimacy may be another person's aggressive and unjustifiable overreach. Also, what a certain government sees as legitimate may be viewed in other parts of the world as a violation of fundamental human rights. This is clearest in authoritarian regimes that impoverish and imprison their political opponents for so-called crimes against the state.

It all depends of who is performing the oversight. I am not quite sure how any political oversight could function effectively while still protecting the financial privacy rights of individuals. Thankfully, it doesn't matter anymore.

By Jon Matonis
American Banker
Thursday, April 11, 2013

Data and Statistics for these countries : Cayman Islands | Cyprus | Luxembourg | All
Gold and Silver Prices for these countries : Cayman Islands | Cyprus | Luxembourg | All
<< Previous article
Rate : Average :3 (2 votes)
>> Next article
Jon Matonis is an Austrian School economist focused on expanding the circulation of nonpolitical digital currencies. He argues that what is about to happen in the world of money is nothing less than the birth of a new Knowledge Age industry: the development, issuance, and management of private currencies.
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Gold and Silver Update
29 Sepjustatrader
Hi Florian, good analysis. But don't you think have a stop at 1120 would be detrimental to the longer term upside bias? It is a great level of supp...
Congress and the Fed Refuse to L...
29 Sepsonora691
Great idea!! Audit the Fed, and while we're at it, let's get someone to audit the gold vaults in Fort Knox and at the Federal Reserve's gold storag...
In Defense of Gold
29 Sepsonora69
In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any US individual, partnership, association or corp...
29 Sepsonora69
In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any US individual, partnership, association or corp...
Gold and Silver Update
28 Sepjustatrader
In hindsight i feel stupid for exiting at 1150 from 1125. I like your bold statement but i think a dip to 1100 is likely... im watching that level ...
BEWARE: What If This Retail Silv...
25 Sepovertheedge
I only gave you three stars and here is why. "However, the important factor to understand is that most investors go after the WELL KNOWN produc...
Gold Daily and Silver Weekly Cha...
25 Sepjustatrader1
Hi Jesee, I came across this site from Zeal LLC and stumbled upon your blog (don't see anywhere to comment so i'm back here). Anyways, just a t...
Bull Trap or Bottom in Gold and ...
24 Sepneville
Just who the hell do think you are byrne....I heard the balderdash you sprouted on the kitco website with that woman cambone.....and it is con...
Most commented articlesFavoritesMore...
World PM Newsflow
Mining Company News
Prb Energy(Oil)PRB
Stock Market Update ...
US$ 24.61+0.07%Trend Power :
Corporate news
Consumers Energy, Grand Valley State University Break Ground on State's Largest Community Solar Project
US$ 35.61+1.95%Trend Power :
Corporate news
Victory Nickel(Ni-Pa)NI.TO
Victory Nickel Granted Extension for Delisting Review by the TSX
CA$ 0.02+0.00%Trend Power :
Corporate news
Piedmont Natural Gas' John Monaghan Awarded N.C.'s Order of the Long Leaf Pine
US$ 40.63+1.52%Trend Power :
Corporate news
Timmins Gold(Au-Ag)TMM.TO
Timmins Gold Reports Small Tear In New Leach Pads
CA$ 0.34+1.47%Trend Power :
Corporate news
National Fuel Gas Co.(Oil)NFG
Winter Heating Season Bills in Western New York will be the Lowest in 14 Years
US$ 51.06+2.37%Trend Power :
Corporate news
Atmos EnergyATO
Zacks Industry Outlook Highlights: Edison International, Atmos Energy, Consolidated Edison and WGL Holdings
US$ 58.93+1.92%Trend Power :
Corporate news
Prb Energy(Oil)PRB
How Does Cantel Medical Compare to Its Peers?
US$ 24.61+0.07%Trend Power :
Corporate news
Prb Energy(Oil)PRB
How Does Costco Compare to Its Peers?
US$ 24.61+0.07%Trend Power :
Corporate news
Victory Nickel(Ni-Pa)NI.TO
TSX Delisting Review - Victory Nickel Inc. (Symbol: NI)
CA$ 0.02+0.00%Trend Power :
Corporate news
Comments closed
  All Favorites Best Rated  
I don't know a heck of a lot about the Bitcoin revolution but I have foreseen 'computer credits' replacing physical money for 30 years. Everybody I have ever discussed this with has laughed at the concept but you have to see it coming. Maybe a closer look at biblical prophesy might be in order as it looks familiar to what is beginning with the Bitcoin revolution. But don't expect it to stop there as we all saw a failure of the Bitcoin 'currency' recently and investors were burnt.

What is coming is a world without currency but with cyber 'credits' as a replacement. But there will need to be a central administrator of such a system to ensure integrity. Then nobody will be able to avoid taxes or squirrel away money. Sort of fair as those who cheat simply require the rest of the population to make up the shortfall. And of course those who cheat and put their money in hidden overseas accounts are normally the richest amongst us. As much as I do not like big brother I also won't be unhappy to see crooks get caught.
Rate :   0  2Rating :   -2