The Breakdown - Bitcoin Fixes This: Canada Protest Edition

Starting point is 00:00:00 Part of being in a democracy, like the political system we theoretically have, is that you are allowed to protest. Now, if you protest and you break laws while doing it, you get arrested and you stand trial. That's how this works. You don't get threatened with extrajudicial seizure of your financial assets. And it matters beyond just this protest because one of the bedrocks of why Western economies are so important to the world is the rule of law, the rule of law which does not allow for this type of asset seizure. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.

Starting point is 00:00:38 The breakdown is sponsored by nexus.io, Arculus, and FTX, and produced and distributed by CoinDesk. What's going on, guys? It is Tuesday, February 15th, and today we are talking about Bitcoin fixing this Canada Truckers Edition. Before we get into the meat of this show, however, if you are enjoying, the breakdown, please go subscribe to it wherever you listen to podcasts, give it a rating, give it a review, or if you want to get deeper into the conversation, come join us on the breakers Discord. You can find a link in the show notes, or you can go to bit.l.L.Y slash breakdown pod. Finally, a disclosure, as always, in addition to them being a sponsor, I also work with FTX. So if you've been on Twitter at all in the last 24 hours, you will know that there is basically

Starting point is 00:01:24 just one topic of conversation, the Canada Truckers' Protest, or more specifically, the decision by Canadian Prime Minister Justin Trudeau to invoke the up to now never-used emergencies act to give his government more power to deal with the protests, specifically around their finances. There is a ton to unpack here, but let's do the TLDR on the protests themselves. They started around three weeks ago in Ottawa, and they were sparked by a mandate that requires Canadian cross-border truckers to be vaccinated. However, that was simply the match. the tinder seem to be more generally frustration around pandemic-related restrictions. Now, protests very rarely stay about the thing they started about, which is why it's often so hard to find a way to end them.

Starting point is 00:02:06 In this case, the Canadian government is in a tough spot because even if they reverse course on a vaccine mandate, the U.S. also has a vaccine mandate for foreign truckers that came into effect in January. There are also questions about how much this is a symbolic issue versus a practical issue, given that most of these drivers are designated essential workers. Now, at the beginning of these protests, the Trudeau government was extremely dismissive, calling them a fringe group. Two and a half weeks later, however, the crisis continues. And of course, as you might imagine, there are massively different interpretations of the protests, with the protesters calling themselves a freedom convoy and authorities calling what they're doing a siege.

Starting point is 00:02:43 Whatever the case, there's no doubt there is economic harm being created. Protesters are currently causing major disruptions around the Ambassador Bridge, which connects Detroit, Michigan, to Windsor, Ontario. About one-fourth of U.S.-Canada trade comes across the bridge, representing hundreds of millions of dollars annually, and there really aren't good alternatives. The auto industry has relied on this bridge since 1965, and even small delays can shut down plants. In this particular case, Ford and Toyota have been forced to shut down because parts are being delayed. Now, a key part in all of this is the money story. Fundraisers for the protests via GoFundMe and GiveSendGo have been frozen,

Starting point is 00:03:20 and Bitcoin came up as an alternative via tallycoin. but even that is now facing political issues. When it comes to what regular Canadians think, it's varied. Trucking associations have distanced themselves, saying the majority of their members are vaccinated. However, you have to remember that there is a strong sense that this isn't just about vaccine mandates. According to the BBC, opinion polls in Canada suggest that between 30 and 40% of Canadians agree with the message of the protests, but a particularly telling poll might be a recent EPSOS poll, which indicated that 46% of Canadians, quote, may not agree with everything that the people who have

Starting point is 00:03:53 taken part in the truck protests in Ottawa have said, but their frustration is legitimate and worthy of our sympathy. I think this is telling because it shows that even if you don't think that they're quote-unquote right, you understand where they're coming from. And of course, that core of that frustration is a question, what's the roadmap back to normalcy? In a world where you have large percentage vaccine compliance, and Omicron, which seems less severe in practice than previous variants, people are asking, when do we get on with it? At the end of last week, it looked like there was some amount of give from the Trudeau government. He basically started assuring Canadians that he was looking towards reopening and considering

Starting point is 00:04:30 lifting some federal measures. A number of provinces also shared similar messages and made changes around things like requiring vaccines for gyms and restaurants. The Prime Minister even caught some rare flack from within his own party. Liberal MP Joel Lightbound accused him of, quote, politicizing the COVID response. Yet the beginning of this week saw a dramatic turn of events the other direction. Yesterday on Valentine's Day, Trudeau activated the Emergency Act, saying, it is now clear that there are serious challenges to law enforcement's ability to effectively enforce the law. It is no longer a lawful protest at a disagreement over government policy. It is now an illegal occupation. It's time for people to go home. This is about

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Starting point is 00:06:33 The breakdown is sponsored by F-TX-U-S. F-T-X-U-S is the safe, regulated way to buy and sell Bitcoin and other digital assets, with up to 85% lower fees than competitors. There are no fixed minimum fees, no A-C-H transaction fees, and no withdrawal fees. One of the largest exchanges in the U.S. FDX-U-S is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTX, you pay no gas fees. Download the FTCX app today and use referral code breakdown to support the show. Let's talk about the Emergency Act. This law came into existence in 1988 and has never been used. It is the successor to the War Measures Act, which itself was only used three times, during both World Wars and during a political kidnapping of a British diplomat and a Quebec politician by the Quebec Liberation Front. The law grants Trudeau's government

Starting point is 00:07:28 extreme powers for the next 30 days, which include powers to prohibit public assembly and travel and the use of specific property. Now, there's a ton of legal questions that are even beyond the scope of this, but one justification of this idea seems to be the idea that these protests are, quote, foreign influenced activities because so much of the funding has come from U.S. nationals to support the protests. And indeed, funding is where the crypto industry is really getting fired up and very concerned about the Emergency Act. Under this, banks and other financial institutions will be able to freeze the accounts of those suspected of supporting the blockades without court order. Insurance on vehicles that are being used in the

Starting point is 00:08:09 protests can be suspended. All crowdfunding platforms and payment providers must register now with Canada's anti-money laundering agency FinTrack, whereas previously they were exempt from FinTrack reporting, and the government is saying this is inclusive of crypto. A government representative said the illegal blockades have highlighted the fact that crowdfunding platforms and some of the payment service providers they use are not fully captured under the proceeds of crime and terrorist financing Act. We are making these changes because we know these platforms are being used to support illegal blockades and illegal activity, which is damaging the Canadian economy. So this is ratcheting the situation up to a totally different degree, and the reaction on Twitter has been intense and incredulous.

Starting point is 00:08:47 Greg Price, as Senior Digital Strategist at X Strategies says this is literal madness. Canada's Deputy Prime Minister says under the Emergencies Act, banks can immediately freeze or suspend bank accounts without a court order and be protected from civil liability. Price points to Canada's Deputy Prime Minister who said, quote, if your truck is being used in these illegal blockades, your corporate account will be frozen, the insurance on your vehicle will be suspended. The Canadian Civil Liberties Association says the federal government has not met the threshold necessary to invoke the Emergencies Act. This law creates a high and clear standard for good reason. The act allows governments to bypass ordinary democratic processes. The standard has not been met. The Emergencies Act can

Starting point is 00:09:27 be invoked when a situation, quote, seriously threatens the ability of the government of Canada to preserve the sovereignty, security, and territorial integrity of Canada, and when the situation cannot be effectively dealt with under any other law of Canada. Governments regularly deal with difficult situations and do so using powers granted to them by democratically elected representatives. Emergency legislation should not be normalized. It threatens our democracy and our civil liberties. Woke-all-distance points out why this is scary. This is the real danger of the administrative state. Arresting you requires actual police officers to go out and physically do the act of arresting you. The bureaucratic state can freeze your bank account, revoke your license, and shut down your life with the push of a button.

Starting point is 00:10:07 We need to understand the role real-world friction plays in limiting government power. As more of society moves online, it becomes easier and easier to exercise power by simply locking people out of the online spaces where life occurs, and to seize and steal their digital assets. Preston Byrne, a lawyer at Anderson-Kill, makes a similar point about just how egregious this is. Canadian police have the power to end the convoy protests by arresting people for traffic violations. The invocation of the emergency powers is not necessary for traffic arrests. The thing which is so crazy is that this is a traffic matter. Arrests, points on your license, that's it.

Starting point is 00:10:42 Trudeau going nuclear seems more like the neo-libs using Canada as a policy laboratory as these convoy protests spring up around the world soon scheduled for America. Literally the only thing Trudeau had to do to not look insane was to be like, we respect your right to protest, but if you block the road, you're going to be arrested. and every would have been like, aw, shucks, Canada so polite. Instead, now the world recoils in horror. If you block a road, you should absolutely be arrested and charge with misdemeanor disorderly conduct or loitering or something like that. You should not have properties seized and lose your ability to earn a living. Viva Frey, who's a Canadian lawyer and YouTuber writes, don't worry, Justin Trudeau

Starting point is 00:11:16 isn't calling in the military. He is just authorizing banks to unilaterally freeze your accounts on the basis of suspicion alone, no court order required with legal immunity. I hope everyone realizes how much more dangerous this is than the military. Viva also said, Justin Trudeau assures us that the Emergencies Act will only be invoked for a limited time. He suspects two weeks should be enough. Cough. Tracy Schuart, whose chai girl on Twitter, who's been a couple-time guest of the show, said, all JT needed was to go out and talk to the protesters, make friends, ask grievances. Now this has escalated into the worst possible scenario ever. Rad Houston writes, Trudeau, these measures are to keep Canadian safe. Also, Trudeau, we're giving banks the ability to seize assets on

Starting point is 00:11:56 mere suspicion with no warrant and no future liability. Nothing screamed safety like giving billionaire own banks unilateral control over your citizens' livelihoods. Now, a further part of the conversation ended up being around CBDCs. Jim Yorio, a host at Pure Exposure Media Group, said, you guys starting to see why sovereign digital currency is an awful, awful idea? Jason Williams, going parabolic, who needs no introduction, said, imagine if governments had a CBDC. They could cut off your funding if you were found to be involved in a peaceful protest. Shut down your bank accounts if they didn't like what you said. Stop you from buying Doritos if they thought you were too fat. Probably nothing to worry about. And of course, the alternative to that is where the Bitcoin or community

Starting point is 00:12:37 jumped in. Lynn Alden writes, I don't comment on specific politics much, but from an investment perspective, it would be interesting tech if there was a self-custodial digital asset with a supply cap that folks could send to each other peer to peer. Kobe says big government see financial financial deplatforming as a tool to control people. They called deplatforming Russia from Swift the quote nuclear option. They couldn't be making the case clearer for decentralized permissionless money. Jeebus writes everyone in the West about to learn the government is willing to turn off their money. Ryan Shot Adams quotes the announcement. With no need for a court order, banks will be able to freeze personal accounts of anyone linked with the protests. This time it's their protest. Next time it's

Starting point is 00:13:17 yours. The banking system should not be a weapon used by governments on their people. We need a new banking system. Jason Yanowitz writes, 2020, the Fed launched a massive marketing campaign for Bitcoin as an inflation hedge. 2020 to 2021, companies and countries move their treasury into Bitcoin. 2022, Canada launches a massive marketing campaign for Bitcoin as a censorship hedge. Niraj, the head of comms at Coin Center, says, oh no, please don't expose how easily the state can lean on financial intermediaries to cut off political protest fundraising. Punk 6529 writes, the thing to watch here is how seamlessly

Starting point is 00:13:52 laws passed for terrorism are transported to manage domestic dissent. Alex Gladstein, the chief strategy officer at the Human Rights Foundation, writes it's hard to believe this is real. The pride with which this politician announces emergency surveillance measures in a country like Canada would have been unthinkable 10 years ago. As a thought experiment, imagine a dictator like Cece or Erdogan announcing these measures. How would you react? Ryan Selkis writes lots of cool stuff happening in crypto and love all of it. But if you can't understand why Bitcoin is king and its narrative remains the most important thing in crypto, after a modern democracy just labeled political opponents domestic terrorists, I don't know what to tell

Starting point is 00:14:30 you. Some Bitcoiners have been even more caught up in this. BTCSessions, who's one of the organizers of the Tallycoin fundraiser, says, these past few weeks have likely been the most stressful in my life. I've tried to do the right thing in a fast-moving and delicate situation. Unfortunately, that comes with labels that range from terrorists to scammer depending on who you ask. Regarding Tallycoin app, there's no way to keep the page up while pausing contributions, unfortunately. Therefore, the page admin has unpublished it for the time being. Goals were met, there is no need for more at this time. The funds raised have already been reallocated to a new multi-sig quorum of which neither myself, Jeff Booth, or Greg Foss have control. This was done days ago and given developments as of late,

Starting point is 00:15:07 I believe it was a good call from a security perspective. Greg Foss, who is no longer on Twitter, had his situation summed up by Sats Joseph, a contributor at Bitcoin Magazine. Quote, he coordinated the support for Canadian truck via Bitcoin donations. Emergency powers designated this is terrorist financing. Greg is now disappeared from Twitter. This is crazy. I'm used to stuff like this in Belarus, not countries like Canada. Jake Chavinsky, the head of policy at Blockchain Association, writes, as other countries restrict the right to transact freely, the U.S. looks more and more like the best place in the world to build decentralized infrastructure thanks to our strong First

Starting point is 00:15:41 Amendment protections from freedom of speech and Fourth Amendment protections for financial privacy. Now, interestingly, as this all was happening last night, market started pumping. BitBik crypto writes, the Canadian government just woke up the Bitcoin Bulls. You can't make the shit up. Well, Clemente, even more simply, called it the freedom pump. Now, by way of wrapping up, I think what is attracting attention here is the power overreach. Warren Tagami, the VP of Solutions at Blockstream writes, I'm not aligned with the truckers, but shutting down bank accounts of protesters strikes me as too much like the shit the CCP does to cripple critics in Hong Kong. You lost the plot if you call yourself a liberal democracy

Starting point is 00:16:17 while calling people you disagree with terrorists. Dmitri Kofinas, the host of hidden forces, points out that any solution to this is going to involve the political process in some way. We need to come to terms with the fact that there is no simple solution to the rise of authoritarianism in Western society. That said, no solution is possible without politics because politics is power, and power is ultimately what this is all about. Now, for me, I very much resonate with the people who are focused here on the threat to the rule of law

Starting point is 00:16:45 and what it means for society more broadly. Part of being in a democracy, like the political system we theoretically have, is that you are allowed to protest. Now, if you protest and you break laws while doing it, you get arrested and you stand trial. That's how this works. You don't get threatened with extrajudicial seizure

Starting point is 00:17:03 of your financial assets. And it matters beyond just this protest because one of the bedrocks of why Western economies are so important to the world is the rule of law, the rule of law which does not allow for this type of asset, seizure, it undermines the fundamentals of what market participants can expect and trust.

Starting point is 00:17:22 Slippery slope arguments are often bullshit, but in some ways it seems like such a preposterously easy to deal with situation that the fact that they're jumping immediately to undermining any sort of due process around financial asset seizures really raises questions. I don't know what to make of it and I don't know what's going to happen next, but it's certainly something that we need to keep our eye on, not just as Bitcoiners but as market participants and free citizens in general. For now, I want to thank my sponsors, nexo.io, arculus, and FTX. And thanks to you guys for listening.

Starting point is 00:17:53 Until tomorrow, be safe and take care of each other. Peace.

The Breakdown - Bitcoin Fixes This: Canada Protest Edition

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