The Financial Freedom Report is a newsletter focusing on the role currency and banking play in the civil liberties and human rights struggles of those living under authoritarian regimes. We also spotlight new tools and applications that can help individuals protect their financial freedom.
Greetings readers,
Today we bring you news of Chinese citizens trading cryptocurrency despite a state-imposed ban, Russia’s recent blockage of VPN services and privacy protocols ahead of next month’s presidential elections, and Venezuela’s attempt to pass legislation that takes aim at the funding of civil society organizations and human rights defenders.
We end with a discussion on how Kenyans can protect themselves against the shilling’s worst devaluation since 2008 and a link to our chief strategy officer’s latest essay about how Bitcoin is bringing electricity and sound money to people across the African continent.
We’ve got a lot to cover, so let’s get started!
Russia has begun blocking OpenVPN and Wireguard connections, denying citizens access to crucial VPN services and protocols. Virtual Private Networks encrypt data, hide IP addresses, and make user browsing history and location harder to trace. Demand for VPN services spiked significantly following Vladimir Putin’s invasion of Ukraine, as Russians under a propaganda blackout sought external news. Russian state tactics to deny Internet freedom and open access to knowledge come at the same time as new laws are being drafted to target and confiscate funds from opposition groups, highlighting the ongoing need to get better open-source privacy and payment technology into the hands of activists under authoritarian regimes.
Citizens are saving, transacting, and trading bitcoin and other cryptocurrencies inside China, despite the Chinese Communist Party (CCP) banning these activities three years ago. Chinese traders continue to meet at cafes, kiosks, and even laundromats to share wallet addresses, conduct cash trades, and arrange bank transfers. They also use popular social media apps like WeChat and Telegram to make direct peer-to-peer crypto trades. Though the CCP has tried numerous times to restrict bitcoin mining and the use of bitcoin as a currency, it has failed, spotlighting bitcoin’s critical importance for people living under tyranny.
Earlier this month, the government of Iraq prohibited cash withdrawals and transactions in US dollars, allegedly to combat the “misuse of its hard currency reserves in financial crimes.” According to the Iraqi Central Bank (CBI), around 50% of the $10 billion that is imported in cash annually from the New York Federal Reserve is used illegally. Though this latest prohibition is framed as an attempt to reduce illicit activities, the move is also being used as a means to de-dollarize the economy, reduce the reliance on the US dollar, force Iraqis to use the depreciating dinar, and move to an electronic payments system where the regime can have more visibility and control over the public’s financial activity.
The Venezuelan government is pushing a bill requiring civil society organizations to seek government authorization for their operations and to disclose foreign funding. Titled the “Law of Supervision, Regularization, Performance, and Financing of Non-Governmental and Related Organizations,” the proposed legislation would threaten civil society groups with penalties, confiscation, and criminal charges. Attempts to approve this bill coincide with the 2024 presidential elections, suggesting its intended use is to suppress debate and dissent. In the meantime, alternative financial solutions like bitcoin can help dissidents and civil society organizations to continue operating while avoiding the government-controlled financial system.
Libyan interim Prime Minister Abdul Hamid Dbeibah’s proposal to eliminate petrol subsidies, currently at 50%, has sparked public backlash. Dbeibah claims the subsidies, which exceeded $12 billion in 2022 (a considerable jump from $7 billion in 2021), are straining the government’s finances. Despite low fuel costs (a liter of crude oil and diesel costs $0.03), an average salary of $240 per month means the removal of petrol subsidies will hurt people’s savings, employment opportunities, and the economy, amplifying the risk of unrest in a divided country beset by authoritarian rule. As one Libyan put it, “This [lifting petrol subsidies] would make people’s struggles worse, especially with irregular salary payments, high cost of living, and the inability of people to buy even daily necessities.”
Thailand | Central Bank Conflict and CBDCs
The Bank of Thailand refused to hold a special meeting to lower the policy interest rate, despite pressures from Prime Minister Srettha Thavisin and the business sector. Central bank independence from the government is generally considered a positive outcome, helping avoid political interference in monetary policy. It’s not clear, however, how long the central bank can resist pressure from the dictatorship. The regime recently launched a retail CBDC (Project Bank Khun Phrom) and wholesale CBDC pilot (Project mBridge), raising questions about financial surveillance for Thailand’s 71 million people living under autocracy.
BTrust Builders | January Fellowship Cohort Kicks Off
BTrust Builders announced the start of its January 2024 fellowship cohort, made up of 55 fellows from across the African continent. BTrust Builders is a program designed to train experienced software developers in Africa to contribute to open-source Bitcoin and Lightning development. Through an immersive learning experience, the initiative gives participants the necessary knowledge, skills, and opportunity to have a stake in the future of Bitcoin. The work of BTrust Builders is crucial to improving the global Bitcoin development space and is something we at HRF are proud to have helped support when the project was first created under the Qala name.
Aqua Wallet | Open Source Bitcoin and Stablecoin Wallet
Aqua Wallet, a non-custodial mobile wallet that allows users to send and receive bitcoin on chain, via the lightning network, over the liquid sidechain, as well as USDT over the liquid network in the same interface, is now open source. This type of wallet makes it easy, for example, for an activist in any country to receive bitcoin and then exchange that into a dollar stablecoin without needing to interact with the banking system. This is hugely useful for dissidents or journalists who are struggling with both surveillance and a collapsing local currency.
BitVM | Proposal Discussion with Brink
Robin Linus, the creator of BitVM, joined Brink engineers to discuss his BitVM proposal and associated projects. BitVM is a computing paradigm aiming to bring Turing-complete smart contracts to Bitcoin (or, as he says, “a way to advance Bitcoin contracts”). Linus adds that BitVM is trying to enable bridges into other systems” (i.e., Layer-2s), which will help Bitcoin scale to the masses. In this hour-long presentation, Linus dives into BitVM and why it matters for adoption and talks about Stateful Bitcoin scripts, BitVM architecture, limitations, and his future plans. You can watch the recording here.
Hermes | A Lightning Address Messenger with Fedimint
Hermes is a Fedimint-based lightning address server designed to facilitate eCash transactions. It enables users to register with their Nostr public key and username to receive a unique lightning address. To receive payments, the sender follows the lnurlp protocol of the Lightning Network. Hermes then processes these payments by generating a Fedimint Lightning Gateway transaction linked to the receiver’s public key, locking the eCash to the receiver’s public key. The Hermes server then notifies the recipient of the payment, and their Fedimint Client verifies and issues the eCash. Innovations like Hermes pave the way toward a future where Bitcoin, Lightning, and eCash can work together to create alternative, private, censorship-resistant financial systems.
PayJoin | Open Source Funding
Spiral has granted support to developers Dan Gould and Esraa to work on Payjoin, “which allows parties transacting in bitcoin to coordinate payments before posting to the blockchain without third-party intermediaries.” Progress will be made to reduce fees, increase block space efficiency, and improve privacy “at the time of transaction with low communication requirements even compared to lightning.” HRF is optimistic about how technologies like PayJoin can provide activists with more Bitcoin transaction privacy and make it harder for authoritarian regimes to financially surveil their opponents.
HRF x Pubkey | Freedom Tech Series Launches
Last week, HRF and PubKey (a Bitcoin-themed bar and event space in New York City) kicked off our monthly in-person NYC-based Freedom Tech series. The first event, titled “Unlocking Energy and Financial Freedom in Africa,” featured BTrust board member Carla Kirk-Cohen and covered South Africa’s rolling blackouts and how government misadministration of power plants hurts South Africans’ ability to prosper. She also discussed the mobile banking system in South Africa and detailed how bitcoin could be revolutionary for informal markets across the continent. We highly recommend you watch the full conversation here, and stay tuned for more information about the next HRF x PubKey event.
“Lebanon, Life After the State”
By Peter McCormack
In the documentary “Lebanon, Life After the State,” journalist Peter McCormack dives into the country’s tumultuous political and economic landscape, unraveling decades of government mismanagement and corruption, which peaked with the tragic explosion at the port of Beirut on Aug. 4, 2020. He takes viewers through Lebanon’s chronic gridlock, hyperinflation, banking collapse, and the people’s efforts to rebuild with little to no governmental support. You’ll also see why some citizens have turned to bitcoin in their attempt to rebuild their beloved nation. McCormack captures the incredible resilience of the Lebanese people in the face of adversity and shows how people have come together when their government has collapsed and failed in its duty to support them.
Oslo Freedom Forum | Reserve Your Spot
Human rights advocates from around the globe will take the Oslo Konserthus stage on June 3-5, 2024, to share their efforts to defy repression and speak out against injustice. This year’s theme, Reclaim Democracy, emphasizes the pivotal role every individual plays within the global movement for democracy. The Financial Freedom team is looking forward to creating a program track exploring the role open-source money plays in preserving our human rights and civil liberties. Use the code 2024OFF to get an early bird discount on your ticket.
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