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Debate Over Gladstein’s Talk: Debt Colonialism and Bitcoin

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Alex Gladstein’s latest talk at Bitcoin2023 in Miami sparked a spirited debate within the cryptocurrency community on Reddit. The discussion, which revolved around the International Monetary Fund (IMF) and its lending practices, drew mixed reviews. Critics questioned Gladstein’s assertions, citing a lack of concrete evidence and specific examples of predatory loan terms used by the IMF. Some users also found the talk disjointed and argued that Gladstein’s argument was more cogently articulated in his other works and in his book.

However, Gladstein’s talk also had its supporters. They acknowledged his previous successful endeavours to shed light on the darker side of IMF loans, particularly how they can enable dictators to enforce austerity without fear of democratic rejection. Despite this, even his supporters conceded that these important points were not as effectively conveyed in this particular talk.

The discussion took a timely turn towards El Salvador’s controversial move to legalize Bitcoin as an official currency. El Salvador’s decision has been met with scepticism from the IMF, expressing concerns about the potential global financial contagion. President Nayib Bukele, undeterred by the IMF’s warnings about being shut out of credit markets, maintains that this radical currency policy will facilitate remittances from overseas workers.

The IMF, however, has warned El Salvador about the risks associated with Bitcoin, including its impact on financial stability and integrity, consumer protection, and fiscal liabilities. It has even advised El Salvador to revoke Bitcoin’s legal tender status. Despite the IMF’s warnings, cryptocurrencies have found favour in countries like El Salvador, where they allow citizens to avoid currency devaluation and limits on currency export.

In his talk, Gladstein delved into the concept of “debt colonialism,” a system that he argues enables richer nations to exploit poorer ones by trapping them in a cycle of unpayable debt. He explained how Structural Adjustment Programs (SAPs) from institutions like the IMF often lead to economic hardships for the citizens of these countries. He discussed the concept of “double loans” and the use of “the colonial franc,” underscoring how this system allows richer countries to extract resources from poorer ones, benefiting from cheap labour, resources, and interest payments.

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Gladstein also highlighted the increasing debt-to-GDP ratio in developing economies, discussing how other powers, such as China, are trying to emulate this system. He invoked the case of Thomas Sankara, the former leader of Burkina Faso, who was assassinated for advocating against the repayment of colonial debts. Gladstein acknowledged the role of certain Western values in economic success but noted that this success has been facilitated by labour and resource extraction from other countries.

Despite the sombre tone, Gladstein ended on a hopeful note, lauding the potential of cryptocurrencies like Bitcoin. He suggested that a neutral, global currency like Bitcoin could potentially lead to a more equitable global economy. Gladstein concluded by promoting his book “Hidden Repression” and encouraging active participation in Bitcoin economies in developing countries.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. CoinReporter.io and EUReporter.co does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Tokenized KYC: Tron Founder Foresees Crypto Regulation Future

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In a recent interview, Justin Sun, founder of Tron, discussed the increasing regulatory scrutiny on the cryptocurrency industry and how tokenized know-your-customer (KYC) checks could become a new standard. He suggested that, in the future, even decentralized exchanges might need to adopt these procedures to ensure compliance with “travel rules and anti-money laundering (AML) requirements.”

Sun’s comments come amid a broader conversation about regulatory requirements for cryptocurrencies, particularly in the United States. Sun conjectured that the U.S. government could mandate KYC checks for anyone involved in crypto token transactions. This could mean that developers of decentralized exchanges, like Uniswap, would have to ensure KYC checks for all their on-chain users.

In a potential solution to this regulatory challenge, Huobi, a cryptocurrency exchange where Sun is an advisor, recently launched the Dominica Metaverse Bound Token (DMBT). Part of the state-backed Dominica Metaverse Digital Citizen (DMDC) program, DMBT is a “soulbound token” that essentially offers tokenized identity to those who have passed tier 3 KYC verification on Huobi. This verification process includes facial recognition and the submission of personal information and national ID pictures.

DMBT is minted on the Tron blockchain and grants holders “citizenship” to the Dominica Metaverse, which serves as a government-issued ID for the Commonwealth of Dominica. Beyond its initial function as a virtual interaction layer and a regional marketing tool, Sun envisages greater potential for the Dominica Metaverse in other parts of the digital economy.

According to Sun, having a recognized platform with KYC could enable users to access various platforms using the same soulbound token or decentralized ID. Such a system could be adopted by different applications such as Compound, Uniswap, and dYdX to verify a user’s identity.

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Sun believes that this approach could balance regulatory compliance with the core values of decentralization and self-custody of digital assets prevalent in the crypto industry. He anticipates a multitude of use cases for decentralized ID in the future, given its potential to meet both user and regulatory needs.

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