Tuesday, January 31, 2023

Government May Use IRS to ‘Take Down’ Bitcoin: Rickards

Government May Use IRS to ‘Take Down’ Bitcoin: Rickards

Prominent author, economist and gold bug James Rickards believes that in the era of “deep state” hacking and cash bans, the IRS could be used to prosecute bitcoin users.

Also read: Companies Lobbying to Use Your Personal Data Without Restriction, Says EFF

Government Could Weaponize IRS Against Bitcoin

In a series of tweets this week, Rickards, — the best selling author of The Road To Ruin — theorized that despite the common meme of Bitcoin being decentralized and therefore impossible to shut down, the US government could look to weaponize the IRS in order to stunt growth in the space.

This is a theme Rickards has reiterated a number of times. It brings to mind the means the US government used to finally take down infamous Prohibition era gangster Al Capone. (Authorities charged Capone with tax evasion after admitting to owing unpaid taxes — during negotiations to actually pay those taxes in arrears.)

While Rickards does not imply that bitcoin users are gangsters, drug users or tax evaders, he first made this argument after the massive run-up in 2013, and continues to point out that the IRS would be the agency most likely to crack down on bitcoin users:

Here, Rickards alludes to the fact that any use of bitcoin, be that a sale or exchange for goods, constitutes a tax event that people should include in yearly tax statements. Rickards admits this puts bitcoin in the same category as gold but implies that to not include all tax events — due to the perception of psuedo-anonymity that Bitcoin provides — would be an exploitable mistake.

Many bitcoin users believe the IRS to be a soft power in this regard, unable or unwilling to enforce potentially millions of micropayment tax events on a global population. Rickards disagrees. As an expert in Complexity Theory who has working relationships with branches of the government such as the CIA and DoD, his statements carry a degree of authority.

What Happens When the Financial System Fails

The central thesis of his latest book shows where Rickards thinks we are heading: when the next crisis hits, governments and the IMF will look to freeze the banking system (what he calls Ice-9), implementing the use of SDRs (Special Drawing Rights) to liquify the system and promote inflation. The current talk of banning cash and cracking down on tax evasion would complement this and go hand-in-hand with an IRS targeting of bitcoin users.

While weaponizing the IRS in such a way wouldn’t shut down Bitcoin, it would theoretically make life difficult for many users and perhaps drive away potential adopters. As an actual way of stopping Bitcoin, Rickards has skirted the issue several times. He has even mentioned EMPs and blocking of the internet, all of which are events that would damage economies far bigger and more connected than Bitcoin.

However, with the recent Vault 7 revelations, he agrees that methods such as tapping undersea cabling to access data packets is not beyond the realm of possibility:

Yet if the current monetary system fails, and a freeze of the banking system eventuates, like The Road To Ruin theorizes, Rickards knows society will adapt:

Sounds like Satoshi was ahead of the curve.

Do you think the IRS poses any threat to the Bitcoin network or its users? Let us know in the comments.

Image via Wikimedia Commons.

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