Regarding bank secrecy laws applying to crypto, I believe that until we see mainstream adoption, enforcement should not be overly difficult. However, once cryptocurrency goes mainstream, and everyone, everywhere, starts to use it and accept it and all forms of purchases can be done in peer-to-peer fashion, then that is when things may become very difficult to monitor and where enforcement of bank secrecy laws may become impossible.
Currently, our government relies on banks and other financial institutions to comply with reporting requirements and establish internal policies and procedures for such. When cryptocurrency becomes mainstream, and everyone is using it, there will be no need for a middleman, and no good way to determine where money is going or why. As things currently are, cryptocurrency must be converted into fiat for most things, so it is easier to monitor and regulate. Governments fear the day when conversion to fiat is no longer necessary, because that is when governments will likely lose all control.
I predicted some time ago that companies in the retail sector, food and entertainment, banks et al. would establish their own alt coins, and as we are starting to see that now, I foresee that many more will follow. There are so many applications for it. I also foresee some governments establishing their own cryptocurrency and requiring that their currency be used for taxation purposes etc…
The volatility and valuation fluctuations for cryptocurrency are great, especially when trading alt coins. However, the volume and liquidity just isn’t there yet, making it difficult to trade for large-volume traders, especially as it relates to lesser-known alt coins. And since there are no central exchanges, per se, then the volume and liquidity may suffer even further…unless you are trading via an exchange/API that is able to tap into multiple exchanges at once. This does create arbitrage opportunities, however, especially for those that can establish automated solutions that are practical. As the trading volume increases, we will likely see a reduction in volatility, similar to FX. As new alt coins are added to the mix, similar to exotic currency pairs, better volatility options may become available, but we may also see similar downsides in the form of wider spreads and slippage etc…
Having traded both, FX and crypto, I can say that the trading styles are a bit different. Similar to how different currency pairs move, depending on the base currency, time-frame or trading session etc., you may see a different behavior in the overall movement of the market. I also noticed that some indicators are weighted differently, giving some glimpse into what crypto traders favor vs FX traders. I also think that the bots that make up a large volume of FX movement make a big difference. Crypto is more predictable, as a result, in my opinion.
The interesting thing about the Bank Secrecy Act is that is was initially opposed by several groups that attempted to have the courts rule that it violated 4th amendment privacy rights as it relates to unwarranted search and seizure, as well as 5th amendment rights of due process. However, the law states that no warrants shall be issued - except upon probable cause supported by oath and affirmation. The key phrase here is ‘probable cause’. Probable cause can be anything that is defined by law and this definition can change without violating constitutional rights. Anyone with any sense can see the problem here.
The reason why this is important, is because if something like ‘registered crypto wallets’ or similar becomes mandatory, then the same monitoring of funds, violation of privacy rights, enforcement procedures and the consequences that follow, may all become applicable to cryptocurrency. If that happens, all privacy and crypto autonomy will go out the window. I believe that there is a lot at stake, from both sides of the table, and that the war against cryptocurrency has only just begun. Cryptocurrency represents far more than just cheap and convenient money transfers. What we ‘allow’ to happen in these early stages could be critical, and not just for those that are in the United States.