Thoughts after sleeping on a recent incident where a major bank handed its customers' passports, selfies, and transaction histories to scammers who asked from a government email address. I can now phrase my position even stronger.

TL;DR: The problem is not just what the regulators and the governments are doing, although they are doing a lot. The problem is that they are too powerful, and no one can stand up to them and say "enough!"

This was not the case ten years ago. It was, five years ago already. I've seen it in DeFi / Web3, and it's just too obvious with ordinary banking.

Banks want to do business. It's too good of a business to be a bank. And to be a bank you have to be friends with the regulator. Regulators, in turn, want more and more bank friends, as long as they play by the rules. And the banks do. Of course they do.

What we lack is a force on the side of We, The People strong enough that some bank cracks under the pressure and openly states:

• Screw you, governments and regulators.
• Your rules are NOT protecting the customer, they are making it WORSE.
• You want more control, but it's just PRIVACY INVASIONS, and they WILL backfire.
• So yes, we, bank X, ARE WILLING to serve customers in your jurisdiction.
• But we will open OFFSHORE accounts for them, and ship cards by international mail. Perhaps under different names too, which is perfectly legal: the name on your card need not match your passport.
• Not to evade your rules. To PROTECT our customers.
• And now, dear regulator, PLEASE WORK WITH US. We can help you draft good regulation and establish guardrails, so that no regulator, YOU TODAY OR THE NEXT ONE TOMORROW, could stop putting bank clients' interests first.

There is literally NO SUCH BANK. And this is the problem.

I'm sure tons of founders in banking would LOVE to say this. They are already billionaires, so if such a move had a real chance, I would expect someone to have tried it by now. But the governments and regulators are too damn powerful. Power corrupts, and absolute power corrupts absolutely. When it comes to financial overseeing, our overlords are corrupted.

And I am saying this as an ordinary, law-abiding citizen. I do support KYC and AML. I pass them regularly. I want more people to pass them when buying a house next to mine, a yacht, or a large stake in a startup. Hell yeah, track the source of income.

But the system should be designed bottom up. Not "we, the Regulator, must see everything", but "here is the list of acceptable documentation: provide it and you are GUARANTEED to pass KYC/AML". Tax forms and income statements, for instance. Not one's home address, for God's sake, not one's net worth, and definitely not one's family and family businesses.

A trivial change, really. And finally: make it unconditionally legal to bank in a different jurisdiction. Today, banks in plenty of countries refuse citizens of certain other countries, only because those countries make it too damn hard. It should be perfectly fine, as long as one pays their taxes at home. Fierce competition would follow, and transfers would take seconds for EVERYBODY, because commerce works. Top-down suffocation does not.

The Web3 folks have already built the rails. Seconds-long settlements for fractions of a penny, at scale, with receipts and proofs attachable to any transaction, so that the parties CAN CHOOSE to show them, decrypt them, or ZK-prove something about them without revealing the rest. With an on-chain USD[C] account and Web3-friendly payroll and brokers, one's tax forms are a) fully automatic, b) perfectly auditable, and c) impossible to make a mistake in. Yes, impossible. Some operations, designed right, leave no room for a mistake, and getting paid while the tax authority knows about it is one of them.

We had a chance to live in this world by 2024. Or so it seemed in 2016. We blew it up.

But if enough sane powerful people say "enough!", the tide may well turn. That is what I would love to see, as an ordinary user of the world's banking system.