I sound like a nutcase; I know.
I could see it in my octogenarian grandpa’s eyes, as he thought what I said was ludicrous. Surely money in a bank account in my name is my money? Surely positive balance in that account can always be transformed into sandwiches, gasoline, or rent payments? The bank works for me, right? It’s their duty to facilitate my spending.
No, I tried to convince him; bank deposits are not yours, practically or legally. Banks can freeze your account and stop your payments at any time, for any reason. Thus, bank deposits fail any rudimentary sniff test of “money,” yet everyone treats them as synonymous with the freest, simplest monetary media they’ve ever seen. It just always works, right?
Just days later, Revolut, the European fintech institution that has taken the world of money and banking by storm, froze my account. The access point to my own funds that I’ve been using daily for probably a decade simply stopped working.
Was Revolut spying on me in grandpa’s living room, waiting for the most ironic moment to flex this godlike power?
When Your Money Isn’t Yours
You never think it’s going to happen to you — or at all. I should know better than most. For years, I’ve written and spoken about the nature of our modern, permissioned fiat money. And even so, I’m receiving a painful lesson in how modern banks really, really work. money in a bank account isn’t yours, nor even, really, money at all (a neutral bearer asset under your exclusive control). We know that fiat fails as a monetary system, because its redistributive inflationary consequences and terrible impact on asset prices assure its value falls over time. But what is so absurd is how the overregulated banking system doubly fails, by simply canceling our ability to pay, when we least expect it.
“What Did You Do?”
It’s the most obvious — and wrong! — question. Banks on the hook for unworkable regulations don’t need a reasonable excuse to block your funds. Asking why assumes that banks only ever freeze accounts or stop payments with proper cause. Besides, you never really know the specific reasons why financial institutions block someone’s access — you can only guess.
In my case, I received a payment for services rendered, as I have a hundred times. But one client — or their bank — mysteriously tried to claw back the funds. The complaints received by Revolut on behalf of this other bank — Germany’s Allianz, mediated via Apple Pay — made them freeze my account and start a review, provisionally. The end date seven days out. When I submitted documents and the standard range of DarkWeb-worthy identification details, accompanied by well-chosen words of discontent, this date suddenly shifted another three days into the future.
How Regulatory “Protection” Became the New Fragility
Adding insult to endless injury is the knowledge that anti-money laundering (AML) regulations and fraud protection efforts that justify bank powers and interventions like this are almost entirely misdirected. AML compliance costs banks tens of billions every year. Yet their record for “protecting” customers and preventing legitimate financial fraud is roughly zero.
Experts estimate that criminal proceeds prevented through banks benevolently spying on their customers amounts to fractions of a percent of dirty money flows — at a cost, financially and in inconvenience, well above what it’s worth.
With an oversized state and regulations that grow faster than anyone can read them, we have become too collectively comfortable with the dark triad of banks, digital surveillance, and government anti-money laundering powers. Bitcoin founder Satoshi Nakamoto wrote,
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.
Most didn’t listen. I did, but I still fell prey to this nonsensical monetary arrangement. The only reason I can cover my expenses this month — rent, groceries, pension contribution — is precisely because I have access to unstoppable digital money that nobody else controls.
Is Ownership a Myth?
A bank account, says fellow bitcoiner and Swede, Knut Svanholm, is a two-of-three multisig security arrangement between you, the bank, and the state. Together, they are always in control (and possession!) of your funds. You access it at their mercy.
Nothing about this debacle makes any sense, and I can’t wait for the monstrosity that is fiat money, banking, and financial regulations to collapse — under their own contradiction, to paraphrase the Marxists. Or merely through the exit of us ordinary people who finally have enough.
Even if I ultimately get my fiat funds back, I’ll probably never bank with Revolut again — and be increasingly suspicious of every other bank. For how do I live with an AML-shaped sword of Damocles forever hanging over my head?
No, thanks. Fiat Delenda Est.
