Surveillance situation in crypto. The government is spying on you.
More and more, you will hear that governments are working to bring KYC/AML regulations and laws into existence for law enforcement and money laundering prevention. The government is employing institutions to do their job, create tools for surveillance, and monitor how has what and where not just for collecting taxes but also to extend government powers over its citizens regardless if they are guilty of something.
Surveillance company Chainalysis raises $100 million, and the company's valuation is now $4.2 Billion. They are growing because of demand from exchanges and government agencies to track every move in all blockchains. When Bitcoin started, this was not a thing. Still, as Bitcoin became famous, governments and its institution sought to get their share of the action by ensuring the government had tabs on its citizens and their asset movements in the crypto world.
Other institutions are working on making the government's job' easier by creating tools that help them track users' funds, and as such, the group called the Travel Rule Protocol TRP to release its 2.0 version. They aim to enhance crypto-financial transaction data to comply with KYC/AML policy. This only means they want to know and give that data to the government so that users of financial tools like exchanges can be tracked all the time and have a paper trail behind them.
The tools the government and its institutions are creating for surveillance of its citizens' relay in a clear point of failure "centralized exchanges." If you exchange your fiat into crypto using centralized exchanges, that exchange knows at what time and price you bought your initial satoshis and will also know exactly where you sent them once you withdraw to your wallet. They can follow your coins in the blockchain because they see what your transaction was.
Those tools lose most of their thunder when you acquire your satoshis by buying your coins on decentralized or p2p exchanges. If you mined your coins with equipment that the government doesn't know you have, or by working and receiving your funds without the need of a third party, in other words, your employer paid you with a crypto asset, or you earned your funds by working online. You didn't disclose your personal information.
You must always pay your taxes unless you want to end up like John McAfee, who killed himself even when he warned us that he would not do it and that he was content in jail.
Once the government print too much money and their bills lose purchasing value, they go crazy and start creating laws that seek to destroy that which holds value against their printed fiat. They also produce a rule to try to trap money within their borders. That is when they will use those surveillance tools they are creating today. When politicians finally bring down the value of your fiat money is when you will discover that using centralized exchanges was a bad idea from the get-go. The problem is not about not paying taxes. The real problem is when a country's economy goes down, you must escape it to rescue your hard-earned money and probably your life savings.
It honestly feel like the governing bodies are scared of the fact that more people are investing in crypto currency and would be able to use them for transactions instead of bank notes.