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OpnState, a pseudonymous civil servant and former corporate banker, joins Shawn to expose the hidden mechanisms of global financial standards and their impact on trust and sovereignty. From his role drafting anti-money laundering (AML) legislation, OpnState reveals how the Financial Action Task Force (FATF) enforces KYC and AML rules, centralizing power and eroding individual rights. He discusses the challenges of reforming a surveillance-heavy system, the power of citizen action through Freedom of Information (FOI) requests, and the hope offered by cypherpunk innovations like Bitcoin. Recorded June 16, 2025, amid growing global tensions, this episode examines why transparency matters, what’s at stake in 2025, and how individuals can reclaim agency in a trust-minimized future.
Background
OpnState is a pseudonymous policy and legislation advisor in a jurisdiction with a major financial sector. Formerly a corporate banker managing million-dollar accounts, he grew disillusioned with a financial system rigged to enrich elites. Now, as a civil servant, he’s drafted over a dozen pieces of AML legislation, giving him an insider’s view of the FATF’s global standards. Through podcasts and posts on Nostr, OpnState critiques centralized control while advocating for transparency and decentralized governance. His pseudonym allows him to speak freely about the erosion of sovereignty and the need for citizen engagements.
Highlights
Music in this episode by More Ghost Than Man.
Background
OpnState is a pseudonymous policy and legislation advisor in a jurisdiction with a major financial sector. Formerly a corporate banker managing million-dollar accounts, he grew disillusioned with a financial system rigged to enrich elites. Now, as a civil servant, he’s drafted over a dozen pieces of AML legislation, giving him an insider’s view of the FATF’s global standards. Through podcasts and posts on Nostr, OpnState critiques centralized control while advocating for transparency and decentralized governance. His pseudonym allows him to speak freely about the erosion of sovereignty and the need for citizen engagements.
Highlights
- FATF’s Global Control: The Financial Action Task Force sets AML and KYC standards, pressuring countries into compliance through mutual evaluations and gray-listing, undermining national sovereignty.
- Erosion of Rights: AML/KYC rules bypass due process, enabling extrajudicial asset freezes and surveillance, a slow erosion of ancestral rights like property and privacy.
- Misaligned Incentives: Civil servants prioritize private-sector prospects and perks over public good, necessitating new incentives like GDP-linked bonuses.
- Bitcoin’s Disruption: Cypherpunk innovations like Bitcoin challenge centralized finance, though integration into traditional systems risks co-option by FATF’s focus on “unhosted wallets.”
- Citizen Power: FOI requests and policy consultation participation can hold governments accountable, with transparency as the key to curbing criminal activity.
- Decentralized Governance: OpnState’s paper on decentralized regulatory frameworks, inspired by game theory, and Taiwan’s POLIS platform offer paths to transparent governance.
- “The government knows everything about you, and you know so little about them. That’s not democracy—that’s a high probability of tyranny.” — OpnState
- “Transparency kills all criminal activity. Cockroaches love to hide from the light.” — OpnState
- “Send an FOI request. It’s free, it’s easy, and it scares the bejesus out of civil servants.” — OpnState
- “Bitcoin negates the old system by creating something better, not by reforming from within.” — OpnState
- “The incentives are all wrong. Civil servants chase private-sector deals, not citizen prosperity.” — OpnState
- OpnState’s on nostr: Follow his insights on global financial standards and sovereignty.
- OpnState's "inside the government" thread: chronicling his day-to-day observations as a government regulatory policy analyst.
- A Decentralized Regulatory Framework: a primer describing a free-market, non-territorial, open regulatory system for financial services.
- vTaiwan and POLIS: Explore Taiwan’s transparent governance platform, led by former Minister Audrey Tang.
Music in this episode by More Ghost Than Man.
[00:00:03]
Shawn Yeager:
Open state. Welcome. Thank you for taking the time today. It's a pleasure to be here. You invited a guy in a mask on your on your podcast. Congratulations, by the way. Appreciate that. Yeah. You are the first to have that distinction, which is great. I've had one NIM, I think, Marks, who's the founder, cofounder and CEO of Open Secret, which, you know, kinda keeps us on on topic, but you're my you're my first NIM. So and for good reason. And and in fact, you know, the the reason I reached out and wanted to have a conversation is that you are in an incredibly interesting rare position in, I believe, from some great conversations you've had with with Stephen, Stefan Lovera, with, Marty Benton and others and your thread on Nostra which I'll post a link to.
You're in an interesting position to strike a balance between burn it all down on the one side and comply harder, you know, on the other. And so I think that's that's the gist of the conversation I'd like to have with you is to to find what middle point or what middle path is there, if there is one, and to get into certainly your experiences, your insights, and what, if anything, we can do to balance out the what to me is an incredibly off kilter imbalance of of power and trust. And so let's start here. You are a NIM for good reason, and therefore, you know, know, it's not as if I'm gonna point people to your LinkedIn or your Facebook profile.
You've done it before. I'll ask you to do it again here. Give us give us an introduction an introduction, OpenState, on your background, where you are, and how you got there, and what your work looks like to the degree that you can share that.
[00:01:41] OpnState:
Alright. Well, I used to be a corporate banker, and I used to manage accounts for fairly large businesses that had over a million dollars or more of, corporate lending. And so I used to assess risk. And at one point, I just got disillusioned with the whole exercise. I realized that the entire system, the entire financial system was really meant and rigged, and it was meant to enrich kind of a very select class of individuals. And this is done through incentives. It's done through messaging. It's done in a number of different ways, but I saw it and I implemented it. So here I was, doing fairly large loans. I was being told that I was helping businesses who needed to have a new warehouse, a new piece of equipment, but really I saw through that at some point. I was just facilitating a monetary system that was bloated and, really incentivized to really help the corrupt make more money.
When a bank doesn't have the money it lines out, is that system really fair? Because the the borrower needs to pay interest. I saw the huge bonuses. You know, I got huge bonuses. It was great, but I couldn't sleep at night. So wanting to make a difference. I looked for roles. I looked for jobs. Kind of at a point where I I wanted to make a difference. And I saw a few roles being advertised within my government. So I said, well, you know what? There's no way I'm gonna get this. I'm just gonna apply. I applied, and it just so happened they needed somebody with banking experience. So they took me on as a policy and legislation adviser, which is what I do currently. I've been doing it for a number of years.
And my initial role was to really help create and draft legislation and policy that would help the local industry in my jurisdiction. I work in a jurisdiction with a very large financial sector, financial services sector. And so I saw that as a a plus and say, well, this is my opportunity to really help and really do something that means that will affect change around me. I said, let's do it. So I joined the government. And literally, the first day or two after I joined, they asked me, well, do you know what the SETF is? And so I I had no idea at the time. I really didn't know. But I I had to hit the ground running because my focus changed from banking to implementing anti money laundering standards, which is what you I think you're based in The US. That's the Bank Secrecy Act. Right. It among a number of other anti money laundering pieces of legislation.
So my role shifted very, very quickly, and then I actually helped draft about 12 different pieces of legislation that implemented these anti money laundering global standards in my country. So as a bit of background, I mean, I'm I'd be repeating myself if I just went through all this again, but my focus of the other talks that I give is really about the subjugation of sovereignty by global standard setting bodies. So I heard you speak about the DSA in one or two of your previous previous podcasts. Yep. US won't be able to remove or or abolish the DSA until it settles its position in those global standard setting bodies.
The FATF, the Financial Action Task Force, is the global standard setting body that sets all of the requirements that countries are, for all of sense and purposes, obligated to implement when it comes to KYC, when it comes to limits, suspicious activity reporting, or recording and detention and maintenance of beneficial ownership information, sanctions. All of those things fall within this umbrella and are, to some extent, dictated by the Financial Action Task Force. So the Financial Action Task Force is really, it's a global forum where unelected bureaucrats like me of various different countries meet and discuss, oh, what should we do next?
What do we see as wrong? What can we do to fix it? And even though elected officials have the ultimate say, they are not experts. So your your elected representative, they trust the unelected bureaucrats like me who go to those forums, who have those important discussions, and come back and say, well, here's what we need to do. And they have a list list of five, ten, twenty, thirty, fifty different things that have to be implemented. And the FETF works by a system of mutual evaluation reports where countries mutually evaluate themselves.
[00:06:47] Shawn Yeager:
You might be interested to know what The US is due for its evaluation next year. So What would that look like? What would that, in practice, open up The United States to or require The United States financial regulatory bodies to to conduct or do?
[00:07:02] OpnState:
So there is a distinction between anti money laundering and regulation. A lot of people can confound the two. Certainly. However, anti money laundering is seen more as a criminal offense than a regulatory type of requirement. And so if you're engaged in, you know, financing terrorism or you're you're laundering the proceeds of crime and here, the word crime, by the way, is increasingly nebulous, where even just speaking out on social media is now perceived as a crime. So as the term is made more nebulous, its implementation will also expand and be prone to an assessment and ambiguity.
And so the FATF would meet they set the standards. They said, well, here's what we see types of criminal activities happening. Here's what the criminals are doing. What can we do to stop it? And that's that's basically what they say happens at those meetings. This is the formal side of things. And then they meet and they argue for hours and hours and days and days on a particular word, a particular requirement that has to be put in, and then it's added to the standards, and then a country like The United States has to implement it. During the implementation phase, which is typically two, three years, a country can have some leeway as to how it implements it.
However, if it deviates in any way in its implementation, it will have to justify why it deviated. So if it used a specific term that isn't in the standard, then assessors will come to the country and look at all the laws, how they're applied, and say, well, look, you're using this term. It's different. And then the country will have to explain, well, we chose this because of that. And really, the point is to be assessed under a microscope to make sure that you're implementing
[00:08:58] Shawn Yeager:
the standards exactly to the letter. There's 40 standards pause there for a moment. Sorry about state. So one thing I'm curious about, and I think it's important certainly, I'm curious about is given, as you said rightly, that this is an unelected group of bureaucrats. When you say have to, what are the carrots and sticks that FATF has to and I will I'll use The United States in as much as, you know, we tend to be the most bravado. Certainly, under the current administration, there is not a tendency to bend the knee, tendency to bend the knee to European or other entities. What are those carrots and sticks? What what could FATF do if they come to The United States and Department of Treasury,
[00:09:38] OpnState:
I presume, has not complied in a way that they see as necessary. Oh, you're right in that The United States is at a very kind of unique position because of its role in the global financial system. But I think you're wrong about the bravado, and I think the bravado is a verbal one. Here's my opinion. Sure. Please. Trump was actually the one. Mhmm. The United States had presidency over the financial action task force when Trump was in office, and that's when they implemented KYC requirements for Bitcoin and digital assets. Now what happens if a country decides not to follow these requirements? Essentially, they get a negative rating. So the ratings follow a largely compliant, compliant, noncompliant, or partially compliant kind of rating system.
If you get a noncompliant or partially compliant, which are the two negative ratings, you know, will be assessed as a higher risk jurisdiction for antimony laundering depending on which requirement it is. So for example, if it's about the transparency of your legal entities in your jurisdiction, if you get a partially complaint on that, it means your legal entities are very opaque, which is a very high risk and could be very useful for criminals if they want to launder money. So that would be a serious negative rating. When your country receives a negative rating, typically, the FATF gives you a period to redress or gives you the option to say, well, do you wanna fix this?
While you're fixing it, you're put on a gray list. It's a it's a it's a period of observation. It's called a gray list. It's just a common term. You'll have time then to fix the situation. Right? You'll be reassessed after that. And if you still don't do it properly, then the global financial center centers and the TradFi, the traditional financial system in the world, then that kicks in. When you look at Moody's, when you look at countries a country's rating for for debt, when you look at correspondent and respondent banking relationships, all of those are based on largely on the FATF's rating system. So for The US, being in its own kind of class may not have that big of an impact because most worldwide jurisdictions have a correspondent relationship with The US. And so really, if The US doesn't follow it, we we're still gonna maintain those relationships. Right. But if you're the multiverse
[00:12:15] Shawn Yeager:
However,
[00:12:16] OpnState:
it is The US which has been the driving force behind the FATF.
[00:12:23] Shawn Yeager:
And why do you why do you think or why do you know that to be the case?
[00:12:28] OpnState:
Oh, I don't know that to be the case. I only know what I see. Right? And currently, The US and Europe are the two largest drivers behind the FATF
[00:12:38] Shawn Yeager:
work. And let me rephrase, and that was not to challenge your knowledge. Happy to do that if that if that comes to it. But what I mean by that is what is in it for The United States? What do you believe to be the incentives or the motivations behind taking the pole position, as it were, with FATA.
[00:12:56] OpnState:
There's a large number of benefits for a country to have this kind of a framework in place. One is the ability to ring fence or put some kind of limits on global financial transfers. Also, it gives you a certain is tax revenue? Well, yes. Yeah. I was gonna get there. Yeah. Please go ahead. Having perfect information, you know, we've talked about CBDCs as a community. I think people know what that is by now. We know the dangers of that. Well, essentially, if you use the traditional financial network through the main banks, if you use your bank account, you're already using something akin to a CDDC where the government has perfect information, is able to freeze your money without the process. The travel rule is something that's being implemented and still being implemented. It's It's problematic, but that was actually put in place while the SETF. Was under the United States presidency.
[00:13:52] Shawn Yeager:
And this is good to know.
[00:13:54] OpnState:
Right. So The US has been a driving force behind these KYC global standards. And I think the number one reason is control and information. What the point of that control, what the ultimate goal of that might be, that's subjective speculation. But having perfect information on financial flows, I think, is the number one reason. And being able to control them and to bypass due process. So the FATF and sorry. Financial the financial system KYC requirements are really a foot in the door to erode due process and erode our rights. Searching without a warrant used to be illegal.
Now it's perfectly acceptable for The United States to do it, for the government to ask a bank for all of your transactions or to be able to place extra legal, yeah, a toolkit. So all of that is actually possible today because of the FETF and the requirements that it requires countries to implement. For a different country, and I'm talking outside The United States, not following the FATF's requirements has immense consequences because of their relationship to The United States. The United States is essentially the main stick behind the FATF.
Most banks, if you're in Uzbekistan, you're in Uruguay, you wanna have a correspondent relationship with The US financial institution.
[00:15:27] Shawn Yeager:
Could you quickly, my background, I do appreciate and understand what a correspondent bank is and does. Could you could you give us a a quick primer on that and as to then why that is so important?
[00:15:38] OpnState:
United States was a global trade currency and take Uruguay, for example. If a certain industry wants to buy equipment or sell their product, it's not gonna be done in the local currency. It's gonna be done in the US dollar. So those businesses, those people need US dollars in order to trade internationally. And the only way to obtain US dollars is through a kind of clearing relationship with The US banks of JP Morgan, etcetera. So a local Uruguayan bank will have a relationship with JPMorgan, which will then allow the bank in Uruguay to obtain US dollars. And once the Uruguayan bank has them, they're able to give them out to the local enterprises so they can trade, etcetera.
So that is the implementation of the stick, and it's basically The United States that enforces this through their traditional
[00:16:34] Shawn Yeager:
banking network. If we if we back up a bit, and I do I am curious about this. So coming from it sounds like commercial banking prior to your role in in your government. How does one how did you not know what you were walking into? I mean, is it possible to operate in a bank and not already be buried in, compliance requirements including FADF and other? So, where where was sort of the disconnect between your role in commercial banking and then stepping in, you know, to the hornet's nest in my view, in terms of the need now to be part of implementing the standards and these regulatory regimes.
[00:17:12] OpnState:
You can't see me smiling right now. Are you are you saying that, judgment? Is that it? No. Well, one might one might charitably assume that that, you know, there was there was, maybe some some some hopeful naivete, but you tell me. Right. I'll I'll let you know what I saw from the banking side. If a new business wants to have a relationship with us, we needed to know who their owners were, who the directors were. We need to have KYC and all those people. We, as a bank, have perfect information on the accounts, the usage, the balances, the type of financial activity going on. We see through their financials, where they are, where they stand, etcetera. So a bank is used to receiving all the information it wants, especially if there's a lending relationship.
So for me, that's what I saw, and I saw the justification for it. Now going to government, that's when I realized that the government also obtains this information. And that's something I didn't know. I didn't know the extent of the anti money laundering requirements and what happens behind the scenes. And that's really why I created this NIM is so that I can speak out, speak freely, and just alert people that this is happening. It's getting worse. You have the CARF system, which is coming in 2020. Crypto asset reporting framework. Mhmm. That's spearheaded by the same organization that's responsible for the FATF.
Okay. Okay. You also have a global taxation framework that's being put in place for businesses, and they're also talking about a pillar three, which is a global taxation system for wealthy individuals. So once you kind of go behind the scene, I've sat in discussions. I've sat in with meetings with the FATF, the team that assessed my country, my my jurisdiction. I was part in defending my jurisdiction so we could get good ratings. I've put in legislation. I've assessed the requirements, identified the gaps. I've essentially delivered what my mandate is supposed to be, but something basically didn't sit right within me, and that's why I created this this new.
So looking at The entire system, it was a wake up call. It was a greater wake up call than what I lived through when I was a commercial banker. Much more worrisome for me, what I'm seeing now, than what I saw working for a bank. So there was some optimism, maybe some naivete. However, I'm glad I actually opted to choose because now, hopefully, I can do something about it.
[00:19:59] Shawn Yeager:
Absolutely. And it does make sense as you explained that that in commercial lending, the required information is inbound, is volunteered. You're not in a position where you effectively need to hover above and surveil and collect. It is willingly given to you because I'm a business that wishes to obtain a loan from you. So that makes a great deal of sense. So you are to sort of summarize and take this forward a bit, you're a civil servant implementing local implementations or or putting in place local implementations of global standards. You've touched on this.
What are some of the key observations that you can share that have shaped your view on how much damage these policies do, how much trust they erode between one's government and and the individual. And I'll add one thing. I I think there will be a percentage of the audience, and I've had previous conversations recorded on this with other guests, who I think understandably look at KYC, they look at the Bank Secrecy Act or equivalent, and they some would say naively, some would say, you know, in a good natured fashion, think, well, of course, You know, just like 2% inflation in The United States. Well, of course, that's the way it's done. So in speaking to those individuals who may not appreciate the gravity of these tools, these these global bodies and their rules, What have you seen that is a wake up call as to how they are a net negative, assuming you believe they are?
[00:21:32] OpnState:
I'll take an angled approach to answering your question, if you don't mind. Please. By stating that your ancestors and the DNA that allows you to live today, that comprises who you are as a as a person, as a human being, that DNA comes from a long list of ancestors. You can go up back ten thousand years. Those ancestors have lived through everything, war, famine, viruses, black death in medieval times. One thing that is instrumental to you having the life you have to live today is your ancestors fought for due process and a respect of rights, which used to be a kind of a foundational part of The United States.
[00:22:16] Shawn Yeager:
Sacrosanct.
[00:22:18] OpnState:
Right. So, you know, expression, the right to property. Right? Benefiting of safety, being safe, and being respected and not having somebody know everything about you and not having somebody put you to jail for no reason without telling you first and allowing you the opportunity to defend yourself. We take those for granted, but they didn't just arrive. It wasn't the government that gave those to us. It was our ancestors who fought for them with their lives quite literally. We all have ancestors that fought, at least in the Western world or even in Eastern world. We all have ancestors who fought for something they believed in, to implement a foundation of rights in order for their children to have a better life.
If you look at AML and KYC today, it might be small. It might be acceptable. However, it is an erosion of those rights. And the erosion, once that crack is is put in place, it's never going away. You know that you have to remove your shoes when you take an an airplane. You have to go through that machine where you have to raise your hands because of the state of emergency that started in 09/11. It's being renewed every year. Since. That's what allows that because you have a right to have somebody not search your bags. They need to have a warrant to do that, or they used to.
[00:23:45] Shawn Yeager:
Never let any tragedy go to waste, as they say.
[00:23:48] OpnState:
So so that crack is a an erosion of the rights that your ancestors fought for that many people today don't really value much because they take it for granted. Yes. And it's only when it's lost, of course, that you realize what you had. So the ability for you to transact, the ability for you to speak your own mind, the ability for you to be able to buy things that you want, to say things that you want, to criticize the government, all of those things are based on these rights that are being eroded today. The UK has set up legislation that's criminalizing speech, Germany, even The US to some extent, Canada certainly.
And so, really, to the people who look at KYC and don't get angry, that's fine. I respect every single human being out there. However, there has to be some awareness of the erosion of the rights that were given to us by our ancestors who fought for them, and we have to take that gift and
[00:24:58] Shawn Yeager:
I very much appreciate that perspective, and I think it is very important to point that out that it was not always this way, and it was dramatically different. I mean, there are films, novels, chronicling of history in the not so distant past where we traveled without passports. We, you know, which would be a hot button issue certainly in The United States these days, but that we could conduct international commerce that, God forbid, you had a Swiss bank account. Right? And, I know my perspective, my views on these things have evolved, but I think as you're as you're pointing out, this ultimately comes down to our ability to think, speak, act, transact freely, and so much as we are not, you know, violating the rights and property of others. And, you know For for somebody who's new to this, I mean,
[00:25:46] OpnState:
you know everything about a government. You have democracy, and you have transparency. But if the government knows everything about you, you have a very high probability of tyranny. Awesome. And and there's an asymmetry between how much the government knows about you and how much you know about the government. Whereas the government has been putting in place powers and legislation through the FCTF and other, like, other organizations in order to have that Information. The the ability of citizens to know about the government is relegated to some FOI laws that were done dozens, you know, fifty plus years ago in most jurisdictions.
So those FOI laws need to be revised. They need to be updated. You know, if you ask me what an ideal FOI law is, is to have a law that says that everything that a government civil servant elected representative does has to be made public, and there's a timer. So things that aren't highly critical are made public right away. So people can look at their elected representative's email and say, alright. Well, what what has this person been saying, etcetera. Everything that you send to an elected representative, you have to know that it will be made public.
For things that are very sensitive, like this attack on Iran, you don't want people to know that right away so you put a timer. And the timer has to go through checks in order to be obtained. Once it's obtained, you've proven that it's a time sensitive critical issue that people can't know about, then maybe it's released in five years, but it will be released. Absolutely nothing that government does should be kept a secret. Nothing. And, ultimately, it's just a matter of time. Because if you look at the JFK files, you look at whatever investigation the FBI does, ultimately, after fifty years, is it still critical, time sensitive? And the answer is yes only if people acted wrongly because they wanna hide what they did. If people did what they did and they followed the law and they did so in good conscience and there's no negative foul play involved, they won't mind if it's made public.
In the end, it's just a matter of times. Those FOI laws really need to be updated. Do I think it's gonna happen? I see in my ministry, in my department, I see an inherent assumption that the government has the right to know absolutely everything about its citizens. Right. It's not even something that's discussed. It's not it's not even brought up as should we. It's, well, we need to know this. Let's do it. And and with that information comes immense liability potential for for misuse.
[00:28:42] Shawn Yeager:
Certainly. Breaches or or otherwise. Absa. We see this we see this every week, it seem. Yeah. And I think what's particularly what the takeaway for me, and I hope our audience is for this, is the remark that in a true democracy, the government knows little about the people, the people know everything about the government, and the inverse is tyranny. And I think that is that's the call to arms to me is that we can observe, I think, easily, readily that we are in a panopticon. We as citizens, as individuals are in a complete and total panopticon as classically defined, where the government fights for the minimal amount, performative transparency.
So the question I think, you know, is what have you what have you seen that has most ignited or informed your perspective? I don't know if you care to add any any particular examples. Again, I know that can be touchy, but I think you have more than adequately addressed at a macro level why the inaction, or enacting of these of these rules and these bodies is is a tremendous problem.
[00:29:51] OpnState:
I mean, there's a lot of different threads that I could pull here. Let's just pull on one, say, incentives. And there is one that I do wanna pull, and, you know, I will use the the opportunity to speak with you to kind of release something that's been near and dear to me for for a while. Oh, yeah. But let's just start on incentives within government. For a civil servant like me. Right? Now some civil servants, most people are like, they're getting paid a lot of money. They have huge pensions. They have all these benefits for working within government. Yes and no.
Most of the money is made when a civil servant goes back to private sector. Sure. The revolving door. They'll use their experience, their connections within the government to sell themselves, and that's really where they make the money. Every civil servant knows this. The career civil servants that are enrolled for ten plus years are very dedicated to their work, and those are my colleagues. They're very dedicated. They go to the training. They're told anti money laundering is a requirement or else criminals will misuse our banks, our real estate.
They'll do crooked things. Mhmm. We don't want that. And so they are really dedicated to ensuring that their jurisdiction isn't used for money laundering and other things. They feel like they're fighting a good fight. I presume. They're fighting a good fight. And and a lot of them are not getting paid that much compared to the private sector.
[00:31:16] Shawn Yeager:
And so No. That's the default in The United States. It well, you know, when you when you open that up, I'll just say that in The US, I think, unless you're at the absolute top tiers, it is the backroom dealings and the and the second career where you make your money.
[00:31:28] OpnState:
The the incentive then is to build relationship with the private sectors. It's to build relationship with the people you're meant to Regulate, to limit. You have these big companies that come in and they want something. They'll lobby for something. As a civil servant, you're gonna meet somebody up for supper at a conference. Really, what's going on behind your mind is, how can I sell myself to get that big contract from this person in front of me? And so the incentive for a civil servant, other things as well. For example, being sent to Hawaii or Paris for a conference, going to a five star hotel while you're at that conference, getting all your meals paid.
Those things are what incentivize civil servants. And so that's wrong if you ask me because people will act in their own best self interest. And in this particular case, it doesn't align with the interests of the citizens if you ask me, in my opinion. And so that's the incentive system. If you ask me what a good incentive system should be, well, I think all civil servants should get a bonus Yes. GDP per capita in a jurisdiction window. And it should be directly proportionate with the increase in the wealth of citizens. And you could do this you could do this on a gross or net, you know, after inflation,
[00:32:52] Shawn Yeager:
doesn't matter. That that's But you anyone I would just say anyone who's worked in sales as I as I have and do, you know, that's that's a team bonus. And, generally, it's an individual bonus, but in the case of being unable to measure individual contributions, you can at least measure the contributions of the team to the goal, and you get a proportionate
[00:33:09] OpnState:
participation in that. So once again, you know, private sector, obvious, government, it sounds like it would be quite novel. It would be novel and it makes complete sense for a civil servant to get a bonus if the people are impacted by the laws that the civil servant puts in place or creates or the policies that it suggests. If the population's doing well, if the businesses are doing well, that should bring about a bonus, but there's no such incentive program in government. And so the first thing that that's one of the things that I realized. Right? The incentives are all wrong. And I saw the incentives in the banking, my banking career. Right? There's all those sales. It's all about doesn't matter what the business should have in terms of leverage.
Increase that loan to the maximum. Right? So in But there is something else that I've realized that really weighs heavy, and I haven't spoken about this in any of my other presentations, is I think having a government that is trustworthy requires the involvement of its citizens. And that, I find, is probably my perspective from within the government, looking back at a population that delegates political power, the only thing they'll do other than discussing it with their neighbor or friends is go to a voting block, tick up one of the names there, and put that ballot in.
And that's, for most people, the extent of their involvement in the political world. At least the extent of their involvement that has any impact, however little that is. And that's something that I see. Now I've created legislation. I've created legislation. I didn't like what I was creating, but we have to consult on it. So I sent the legislation. I did the consultation process. Nobody commented. Nobody raised their voices. They probably read it as a lawyer, as an accountant, whatever your profession that person was, they read it. They're like, oh, I need to adjust this and this and this. My business plan needs to change for this new law. So they they took it if I hear you, they took it as,
[00:35:23] Shawn Yeager:
a settled matter, and I'm now going to react to it as opposed to attempt to affect or change it.
[00:35:30] OpnState:
Exactly. What I really wish would've happened is for the calculation of my jurisdiction to look at that law and go, wait a second. What's this? And I've spoken to people on the side saying, well, you know, have a look at this consultation. I've pushed them. You know? The little that I can, I've pushed them. But they still don't speak up. And they don't speak up because of an inherent fear of speaking up or just the belief that they don't know political things or legal things or laziness. And I have to admit, sadly, that there is a lot of laziness Absolutely.
The general population. And let's just admit it. It's easier to watch Netflix than it is to look at a consultation.
[00:36:18] Shawn Yeager:
Yeah. Laziness or fatigue. And so a a related question, if I may, I you know, I'm thinking about my own sort of relationship to that. I think, for me, certainly, I presume for a lot of my fellow Americans, there is a sense that it is screaming into the void, you know, that sure the FCC may post on some terribly designed fcc.gov site, for commentary, but, you know, it'll get lost in the void or it is just so cumbersome which can be written off to laziness. So the question I have, do you do you believe there is something particular to your jurisdiction where they are better at or more attuned to listening Or are are you perhaps advocating more broadly that we just as citizens need to need to take that opportunity because it is under under Application of global standards.
[00:37:10] OpnState:
For example, the BSA. Say you want to start a campaign to abolish the BSA. Look at Let's do it. Adele. Let's do it. I'm looking at Adele right now. Absolutely.
[00:37:23] Shawn Yeager:
But
[00:37:24] OpnState:
assuming you wanna do that, you're gonna send letters. You're gonna lobby. You're gonna talk to representatives. Let's say you talk to senator Lummis. Senator Lummis is this is a great idea. Let's do it. And senator Lummis is able to convince magically everybody, everybody around her, all of her other life. Just a miracle. She's able to do that. Indeed. Now In order to affect that change, the jurisdiction has to look at the consequence of abolishing the DSA with respect to the global standard setting bodies and the requirements on the standards that they put in place. So now The US has to say, what do we lose by doing this?
Well, we lose something that we fought to implement for the last fifty years, since 1991. Not only that, we're also harming our banks who won't have access to all the anti money laundering beneficial ownership information, which is a huge honeypot for banks. Let's be honest. Sure. And we lose information on taxable activities that our citizens are doing. And even if they get through all of those and they say, we're willing to assume the risk, then the decision has to be made. Well, do we remain in this global standard setting body like the FATF? Or do we leave it? If they choose to remain, which I think is really whether to remain or leave is really a decision that The US has. No other country in the world has that option. Now if they choose to leave, great. I mean, fantastic. But then they'll have there'll be severe consequences.
Most jurisdictions don't have that option, so they they stay. Okay. Unelected bureaucrat like me goes to an FETF plenary and then has to raise their hand has to raise their hand. And go, well well, actually, my government has this opinion now. We shouldn't be doing KYC. We shouldn't be doing this or that or that. There's 40 other countries in the FATF membership that you have to convince at that level in order to remove that requirement. So not only is it a miracle for Lummis to have convinced everybody in The US. Multiply that by 40. Right. All that effort times 40.
Because now you have to to convince a majority of these well, 20. You have to convince a majority of those other jurisdictions to remove that requirement. So this is a centralization of policy making and development, and that centralization essentially removes your ability to have an impact or say on what you have to what what governs you. This global these global standard setting bodies, there are global standard setting bodies for all consequential policy in the world. Doesn't matter what it is. Even fruit the OECD has a fruit standard on how banana should look.
Of course. It's important. You don't want a banana to have less than two and a half fingers with so that the you know, to be able to peel it. There's global standards Central planning. Central planning. Global standards for everything of consequence. So that's the process that a country has to go through if it wants to abolish the DSA. So I look at those initiatives and really The US leaving the FATF, which I never believe it will do because it's the linchpin, the strongest pillar. It's the foundation of the essence, but it has to be either all the other countries leaving or a majority of them leaving or The US leave. And if The US leaves, I don't even know if that will be sufficient
[00:41:29] Shawn Yeager:
to Interesting. The world. Yep.
[00:41:31] OpnState:
Just like the the World Health Organization, US leaving, not sending funding, somebody else comes up. It's the Hydra. There's another head. And so how do we get rid of this?
[00:41:42] Shawn Yeager:
That is my next question. If I knew, I would lobby for it. Right. Right. Because because I think, you know, as as as we're going through this conversation, and we have wonderfully touched on many of of the questions I had made note of, you know, there are, in my mind, the perspective of can you change it from within, and I think you're making, a sound argument as to the high improbability of that even if The US was to flick that first domino. And, you know, American exceptionalism, guilty, but I might have assumed that you were going I was hoping that you were going toward if The US went, if if senator Lummis, pulled off that miracle, it's the single miracle that could bring down the Jenga, but it sounds like no. And so we're left in my mind. This is where I'd love to spend the next bit of the conversation. What else, if anything, can be done? You are inside. Presumably, you're working, you know, toward toward the the effect that you can have, or must we necessarily exit through Bitcoin or other means? So let's let's sort of move into that. What what can be done
[00:42:44] OpnState:
other than complete exit? What can be done other than complete exit? I look at the cypherpunks, and I look at the creation of Bitcoin and other technology. The Internet's a big one. It's bigger than Bitcoin. Mhmm. Internet originally, companies lobbied to ring you wanted a ContiServer, an AOL, or they they they logged in and worked really, really hard to make the Internet something that's very controlled.
[00:43:16] Shawn Yeager:
The original walled gardens.
[00:43:18] OpnState:
The walled gardens. Now in the battle for the Internet, we won. In terms of being able to access information, now you have Internet service providers all over the world. But there's also a centralizing trend with Internet service providers now. Taking as an example, Starlink. Starlink is now responsible for a sizable contribution or access point to the Internet, and that's a centralizing force. When Musk goes away and the next CEO comes about and says, well, I don't wanna give this country or that country or this person access to the Internet. So the Internet now is and we look at big companies. The Internet is essentially Google and Facebook and a few countries it's not countries, organizations, companies. And the Internet is centralizing little by little. So the Internet is a good example of what we could do financially.
We created Bitcoin as a protocol. We're able to transact. But now we're seeing the Bitcoin sector being integrated within traditional finance, and that's being done through legislation that many people in the Bitcoin economy are are lauding. They're very, very happy that Absolutely. No question. Their their their JPMorgan bank in custody Bitcoin is amazing, and they're clapping their hands. That, to me, is worrisome because it's the same effect as Google having more centralized power within the and at one point, I'm not saying right away, but at one point, through legislation, through lobbying, through criminalizing certain activities, having self custody Bitcoin may be seen as something that could lead to money laundering and therefore should
[00:45:15] Shawn Yeager:
be controlled. Had we had a different outcome in our last presidential election, undoubtedly, we would be there or close to it, and we we may still.
[00:45:23] OpnState:
I've the last five years, I've seen unhosted wallets as a term coming up more and more Absolutely. Within the FETF discussion. Unhosted wallets. And so the FETF functions in a very odd way. They can't dictate directly. They can't say, well, this is what you should do. They can't say that. What they'll do is they'll send questionnaires. They'll send questionnaires, and this is one that I've seen, for example. It sent a questionnaire. The questionnaire asks about the risks that we've assessed within our jurisdiction related to cryptocurrencies, virtual asset services, which is the term they use. And they'll ask a question. They'll say, we've assessed the ability to hold cryptocurrencies and unhosted wallets as high risk. How is your jurisdiction mitigating?
[00:46:16] Shawn Yeager:
Presumption of guilt.
[00:46:19] OpnState:
That that was a verbatim question that I saw. And now my jurisdiction was put in a situation where they had not only to assume that there was a high level of risk and acknowledge it, but also think about how those risks were gonna be mitigated. And that's how the FATF works.
[00:46:40] Shawn Yeager:
Right. So they seeded they seeded the idea of the unhosted wallet, which is this ridiculous misnomer to begin with, and they follow it up with, well, naturally, we know that this is unsavory, and so how are you going to solve for this problem that we just created?
[00:46:54] OpnState:
So I'm gonna answer your question, how we can best effect change, either from within or by accident. And I'm going back to really the two fundamental principles that are needed for a government that is I'm not gonna say trustworthy because I never think you should trust a government. But that would make an a government accountable, increasing the transparency of what happens within that government. So revising the freedom of information laws, fixing the incentives, and for the population to be and that is the only way from within, quote, unquote, that government will improve and where we will be able to regain the freedoms that we value, if we value them as a society. Because is an excellent it's very fair to point that conditional out if we value them. And so those are the things that I would do from within.
But I look at the cipherpunk, And if Cypherpunks created Bitcoin They won't. Real disruptors. They didn't disrupt the financial the TradFi, the traditional finance from within. They disrupted it by creating something. And I think that is a key to effecting change in our society. It's not to try and work from within. Working from within may achieve some ends or goals or objectives. We will ultimately create real change by creating something better that completely negates the old system. And this is something that is possible for a government.
I wrote a fairly large paper about a decentralized regulatory framework.
[00:48:42] Shawn Yeager:
Yes. I'll be sure to link to that. It's based on game theory.
[00:48:47] OpnState:
It's based on leveraging the self interest of the regulated entity in order to create incentive to remain within certain regulatory requirements. That's also possible for government. We don't need to have a top down stick gun to your face boot on the boot on the head, approach to regulation and supervision, and governance in we are at a point where we have the technology. We have the ability to create tools, any new governance system will create a government that is completely transparent. If you look at two hundred and forty years ago when the US revolution happened, The constitution created this amazing framework that worked at the time.
It guided a population that had similar values, similar desires, and it created a foundation that enshrined those values and those desires. And because you didn't have telephones, you had to communicate through couriers. It was very localized. It didn't make sense to have everything done in Washington because it would take weeks or months to get there. And as the technology for communication improved, so too did centralizing government functions. It doesn't make sense to have five people in every state doing a function where you can have 10
[00:50:20] Shawn Yeager:
in Washington doing the work of hundreds. And so Although although in practice, they get both. Now they get both. They get to have the employees at the state level in the fed, but I take your point, but I take your point. Cynicism. You know, you're you're welcome, too. Yeah. It is. And so when by this change in communication,
[00:50:35] OpnState:
we've had a centralizing force, and we've also had a polarizing of society. I don't even know today if The US citizenry and I'm talking about The US because it's a I assume people people will be watching this or or from there. I don't even know that The US society has a common ground set of foundational beliefs and values that can unite the entire country. When it comes to immigration question right now. If you look at immigration, if you increase immigration, you satisfy 50% and anger the other 50. If you restrict immigration, vice versa.
If you allow guns, you satisfy 50%. If you allow drugs, marijuana. You you and so Decriminalize. And you can't have I mean, libertarians are all about central localizing governance. However, think about it. If you have immigration policies or gun policies where one state allows guns and another state completely bans them, you need suddenly to have a a frontier, a barrier between them, and you need to search all the vehicles going back and forth to make sure the guns are not going from one to the other. Is that so you can't really localize.
And it used to be something that the entire population, I assume, or a large part of it, agreed with. Citizens have the right to bear arms. Mhmm. And it worked. However, society's norms and values have changed, and there's a polarization of values and and opinions. And so I don't even know now if there's a common ground sufficient common ground to reestablish some kind of federal government without alienating 50% of the population.
[00:52:27] Shawn Yeager:
Yes. No. It's a great point. There is a there is a political cartoon, I believe, from The New Yorker that I often post, and it was it was printed just just after 09/11. Janek is the fellow's last name, and it it, uncle Sam is at a table, and the person behind the table is getting ready to wrap a gift, presumably. And behind him is stop terrorism and protect the children. And the gift in question, from the perspective of uncle Sam is a corporate control of free speech or Internet speech. And so the point being, how would you like this wrapped? And so to your point, I think that is where we are largely in The US is everything is a poll. One of my prior guests, my first guest, John Raab, writes a lot about tribes and swarms as it as he calls them, political swarms, the red swarm, the blue swarm. And so it is an excellent point that to arrive at consensus will be very difficult here, but let's take it here. Where, if anywhere, be it looking to your, your paper and your proposed approach, or otherwise, have you seen bright lights? Are there jurisdictions where you're seeing them move toward the kinds of transparency, the kinds of accountability that you see as being a viable option, again, other than just individuals exiting by way of Bitcoin or otherwise?
[00:53:50] OpnState:
Well, the financial action task force global standards have to be implemented. I think it's a 127 different jurisdictions. And so I may just point to one of the jurisdictions that isn't implementing those standards, but they're not places that you wanna live. North Korea and whatnot. I wouldn't take that trade. On a on an anti money laundering front, all jurisdictions are complying. You look at El Salvador. I was in a a meeting with other financial action task force. It's actually part of a different portion. So I was sitting on that particular meeting. It's called The Caribbean. They were actually lauding El Salvador for their efforts to prevent anti money laundering and financing of terrorism and increasing transparency, which basically means gathering more information and holding it, the government.
So El Salvador is complying.
[00:54:47] Shawn Yeager:
It's just their digital, digital asset committee, I believe it is. I've done a bit of work with a couple of entities there, is complying harder to to put it one way.
[00:54:57] OpnState:
There was one shining light that I really loved, and few people know about it, and that's Taiwan. If you look at the Taiwanese minister of, I think it's innovation, it's it's an ex hacker that got elected. And she really had some amazing ideas to make government more transparent. It was beautiful. I think there was opposition. However, that opposition would have been moot if the population had embraced and participated. Mhmm. And I don't think that her programs got the participation she was hoping for, and so the programs got let down. You should really, really know.
Look. Chang Tam, Theresa Tam. I I I forget the name.
[00:55:47] Shawn Yeager:
Yeah. Get them in the show notes.
[00:55:49] OpnState:
Now if you if you look at what her IDs were, she had the idea of using an online polling platform called Polis, p o l I s, to put every single consequential decision and to create a communal type of discussion for policymaking. Beautiful. Wonderful. I don't think it got the traction that it needed to move forward. And that's the biggest disappointment working from within the government. That's what I've seen is that the population don't get involved. The government might wanna do something, and they don't know in the case of Taiwan. I'll admit I don't live there. This is one place I'll admit to not living. However, I don't know what the reasons were, but the people didn't really participate.
And that's a shame because countries that are doing the right steps should be encouraged, lauded, and applauded. And I see so very few. I certainly don't see any in Europe. I I can't say that I see any in Central America or North America. And, you know, I'm not that familiar with African countries, but I assume they want global capital investment money. And so they're complying harder than anyone else. And so don't know that there are any lights out there, but I do know that by being involved in government, it's the only way to light that torch.
People watching this, don't get up. Send freedom of information requests, push back, complain, criticize, question, doubt their government, their elected representative in an active fashion. If they can get away with catering to lobbyists, that torch isn't gonna be lit. And, really, the key to maintaining our freedoms is that participation. I'm seeing very, very little of it.
[00:57:52] Shawn Yeager:
Well, I'm assuming you're you're, you know, you're wearing that hat for a reason. So I I take your point, which is clearly there is no silver bullet. There is no magic pill. What I take away is that Fadif is the playground bully who leads others to give the beat down anytime anyone gets out of out of line, and so the ability to escape that is is minimal. But I think if I understand you correctly, that it is creating, forcing more transparency through freedoms of information act and other means. It is citizenry participating and voicing and and adding pressure.
[00:58:30] OpnState:
Advising the freedom of information loss is that. Odell or if anybody wants to really make a change within government to really open things up for more transparency because transparency kills criminal activity. Cockroaches love to hide from the light. So with more transparency, you fix everything. You really fix everything. And those freedom of information laws are antiquated, and they haven't been looked at. And very few people, first of all, send freedom of infra of information requests. It's free. You can. If you wanna see where your congressman was last month, you can get their calendar. Every single email I write when I'm at work is a flyable. There's a huge amount of information that's obtainable by citizenry, but it requires time. You have to read it all. It's it's it's just that involvement that's necessary. But now with AI, we can have scanning of a whole database.
So, really, there are opportunities, but that legislative change, I really think the freedom of information request legislation around the world has to be updated. The fact they're there is great,
[00:59:46] Shawn Yeager:
but the government right now knows so much more about us, and we know so little about it. It's a great point. I'm reminded I'm not on Twitter x anymore, but I I see, you know, I get a link now and then, and there's an individual who goes by data republican, lowercase r, as she says, I believe, who is a data scientist and is, I think, using open source intelligent largely, open source intelligence. I don't know that she's conducting FOIA's, but I believe in my mind is a great example to your point of applying modern tooling to being able to rebalance what would otherwise be overwhelming in in the case of the data you would receive from a FOIA. And I will, I'll be sure. I know you're watching this, Odell. So here here's a shout out to him. So, you know, might have thought that you were moving toward a place where you're doing what you can, but your expectations are low. I don't now believe that's the case. I'll get you to correct me, you know. So you're not gonna you're not gonna be in Madeira at Sovereign Engineering, walking away from you from your government job in the near future, or or are you? So so let's let's wrap up on these two points. What is your best case expectation of your work in your current role?
And then for those of us concerned, I hope more and more about maintaining our privacy, our autonomy, what are some of the most effective steps that we can take to protect ourselves, to have a bit more agency in light of everything we've discussed so far. So what is a great outcome for you, and what is a reasonable expectation and steps we can take as individuals in your view? I have to have a problem. If you take a candle
[01:01:28] OpnState:
and you bring it outside at daytime, that candle will have a very small amount of light. You won't you won't notice the candle. If you take the candle in a dark room, that candle can shine. That's really my moral justification for the work that I'm doing. I've done presentations on for ministries and departments within my government, and I see look looks from people who aren't willing to speak out but think the same way I do. When I make a reference to something, when I say a particular word that implies something on freedom, privacy.
And I I see those looks, and that's those are the torches that I'm looking at lighting with my small little candle. It's very rewarding to hear someone else in my department echo something that I've said multiple, multiple things. So that's that's for me. That's the work I'm trying to do. As far as you or anybody who's dissatisfied with their government, the most the easiest thing you can do, say your elected representative did something, purchased something, or took a certain action that you disagree with, send an FYI requesting all of the emails that pertain to that particular purchase or action. Say it's buying spending money for a new building or a new program or a vote that your elected representative took that you disagree with, say, well, I want all of your emails over the last year with this keyword. It's gonna scare the bejesus out of your civil servants and not just from your elected representative.
Ask it for all civil servants within this particular department. Within all All the government. It would scare the bejesus out of me if somebody f lied me, and I've seen this happen. By knowing. And it's it's something that civil servants forget when they send an email, when they get an email. That's public information. It's just not disclosed, and so few people ask for it. They don't know all the emails that they've written over the last year, what they've said, what they haven't said. So when you send that FOI, you might not get what you're looking for. But just the fact that you sent it, the the department everybody in the department and your representative will know you sent it.
And even if they find a way not to send the information to you, you scared them. Try them in a light. Use and believe me, it works. Next time somebody needs to take an action, write it at that email, sign that contract, go to a particular meeting, conference, they'll think twice about it because they know. They can come back and bite them. Send freedom of information requests. It's free. It's easy. It's a form. It's an email.
[01:04:39] Shawn Yeager:
Excellent. And I think it is you know, I'm as guilty as anyone of perhaps assuming that the guidance would be use this VPN, transact in Bitcoin more. But I think it's an excellent takeaway, which is it is unavoidable that in in order to push back and enact change that, to your point, we have to remind them, you know, of of ways in which they can be held accountable. So I think that's excellent, and I am just as guilty and will take your advice to heart. Just tell me what I'm doing. Okay? Wouldn't know where to send it, so that's great. Open state, thank you. I am grateful for your time, grateful for your contributions. I appreciate that what you're doing is not without risk, personal and otherwise, so thank you for that.
And I will be sure that we get links to your Nastro profile, to the paper you referenced. Anything else that you'd like to point people to that would be useful to learn more about your work or the tools or the techniques that you've talked about?
[01:05:36] OpnState:
Send you the link to the Taiwanese minister that I referred to. Terrific. People if if people are interested in in seeing what positive changes of change could look like, she's a good example.
[01:05:47] Shawn Yeager:
Yeah. A firefly is is sometimes all we need. Fantastic. Thanks again, OpenState. All the best. Talk to you soon.
[01:05:54] OpnState:
Cheers. Cheers.
Open state. Welcome. Thank you for taking the time today. It's a pleasure to be here. You invited a guy in a mask on your on your podcast. Congratulations, by the way. Appreciate that. Yeah. You are the first to have that distinction, which is great. I've had one NIM, I think, Marks, who's the founder, cofounder and CEO of Open Secret, which, you know, kinda keeps us on on topic, but you're my you're my first NIM. So and for good reason. And and in fact, you know, the the reason I reached out and wanted to have a conversation is that you are in an incredibly interesting rare position in, I believe, from some great conversations you've had with with Stephen, Stefan Lovera, with, Marty Benton and others and your thread on Nostra which I'll post a link to.
You're in an interesting position to strike a balance between burn it all down on the one side and comply harder, you know, on the other. And so I think that's that's the gist of the conversation I'd like to have with you is to to find what middle point or what middle path is there, if there is one, and to get into certainly your experiences, your insights, and what, if anything, we can do to balance out the what to me is an incredibly off kilter imbalance of of power and trust. And so let's start here. You are a NIM for good reason, and therefore, you know, know, it's not as if I'm gonna point people to your LinkedIn or your Facebook profile.
You've done it before. I'll ask you to do it again here. Give us give us an introduction an introduction, OpenState, on your background, where you are, and how you got there, and what your work looks like to the degree that you can share that.
[00:01:41] OpnState:
Alright. Well, I used to be a corporate banker, and I used to manage accounts for fairly large businesses that had over a million dollars or more of, corporate lending. And so I used to assess risk. And at one point, I just got disillusioned with the whole exercise. I realized that the entire system, the entire financial system was really meant and rigged, and it was meant to enrich kind of a very select class of individuals. And this is done through incentives. It's done through messaging. It's done in a number of different ways, but I saw it and I implemented it. So here I was, doing fairly large loans. I was being told that I was helping businesses who needed to have a new warehouse, a new piece of equipment, but really I saw through that at some point. I was just facilitating a monetary system that was bloated and, really incentivized to really help the corrupt make more money.
When a bank doesn't have the money it lines out, is that system really fair? Because the the borrower needs to pay interest. I saw the huge bonuses. You know, I got huge bonuses. It was great, but I couldn't sleep at night. So wanting to make a difference. I looked for roles. I looked for jobs. Kind of at a point where I I wanted to make a difference. And I saw a few roles being advertised within my government. So I said, well, you know what? There's no way I'm gonna get this. I'm just gonna apply. I applied, and it just so happened they needed somebody with banking experience. So they took me on as a policy and legislation adviser, which is what I do currently. I've been doing it for a number of years.
And my initial role was to really help create and draft legislation and policy that would help the local industry in my jurisdiction. I work in a jurisdiction with a very large financial sector, financial services sector. And so I saw that as a a plus and say, well, this is my opportunity to really help and really do something that means that will affect change around me. I said, let's do it. So I joined the government. And literally, the first day or two after I joined, they asked me, well, do you know what the SETF is? And so I I had no idea at the time. I really didn't know. But I I had to hit the ground running because my focus changed from banking to implementing anti money laundering standards, which is what you I think you're based in The US. That's the Bank Secrecy Act. Right. It among a number of other anti money laundering pieces of legislation.
So my role shifted very, very quickly, and then I actually helped draft about 12 different pieces of legislation that implemented these anti money laundering global standards in my country. So as a bit of background, I mean, I'm I'd be repeating myself if I just went through all this again, but my focus of the other talks that I give is really about the subjugation of sovereignty by global standard setting bodies. So I heard you speak about the DSA in one or two of your previous previous podcasts. Yep. US won't be able to remove or or abolish the DSA until it settles its position in those global standard setting bodies.
The FATF, the Financial Action Task Force, is the global standard setting body that sets all of the requirements that countries are, for all of sense and purposes, obligated to implement when it comes to KYC, when it comes to limits, suspicious activity reporting, or recording and detention and maintenance of beneficial ownership information, sanctions. All of those things fall within this umbrella and are, to some extent, dictated by the Financial Action Task Force. So the Financial Action Task Force is really, it's a global forum where unelected bureaucrats like me of various different countries meet and discuss, oh, what should we do next?
What do we see as wrong? What can we do to fix it? And even though elected officials have the ultimate say, they are not experts. So your your elected representative, they trust the unelected bureaucrats like me who go to those forums, who have those important discussions, and come back and say, well, here's what we need to do. And they have a list list of five, ten, twenty, thirty, fifty different things that have to be implemented. And the FETF works by a system of mutual evaluation reports where countries mutually evaluate themselves.
[00:06:47] Shawn Yeager:
You might be interested to know what The US is due for its evaluation next year. So What would that look like? What would that, in practice, open up The United States to or require The United States financial regulatory bodies to to conduct or do?
[00:07:02] OpnState:
So there is a distinction between anti money laundering and regulation. A lot of people can confound the two. Certainly. However, anti money laundering is seen more as a criminal offense than a regulatory type of requirement. And so if you're engaged in, you know, financing terrorism or you're you're laundering the proceeds of crime and here, the word crime, by the way, is increasingly nebulous, where even just speaking out on social media is now perceived as a crime. So as the term is made more nebulous, its implementation will also expand and be prone to an assessment and ambiguity.
And so the FATF would meet they set the standards. They said, well, here's what we see types of criminal activities happening. Here's what the criminals are doing. What can we do to stop it? And that's that's basically what they say happens at those meetings. This is the formal side of things. And then they meet and they argue for hours and hours and days and days on a particular word, a particular requirement that has to be put in, and then it's added to the standards, and then a country like The United States has to implement it. During the implementation phase, which is typically two, three years, a country can have some leeway as to how it implements it.
However, if it deviates in any way in its implementation, it will have to justify why it deviated. So if it used a specific term that isn't in the standard, then assessors will come to the country and look at all the laws, how they're applied, and say, well, look, you're using this term. It's different. And then the country will have to explain, well, we chose this because of that. And really, the point is to be assessed under a microscope to make sure that you're implementing
[00:08:58] Shawn Yeager:
the standards exactly to the letter. There's 40 standards pause there for a moment. Sorry about state. So one thing I'm curious about, and I think it's important certainly, I'm curious about is given, as you said rightly, that this is an unelected group of bureaucrats. When you say have to, what are the carrots and sticks that FATF has to and I will I'll use The United States in as much as, you know, we tend to be the most bravado. Certainly, under the current administration, there is not a tendency to bend the knee, tendency to bend the knee to European or other entities. What are those carrots and sticks? What what could FATF do if they come to The United States and Department of Treasury,
[00:09:38] OpnState:
I presume, has not complied in a way that they see as necessary. Oh, you're right in that The United States is at a very kind of unique position because of its role in the global financial system. But I think you're wrong about the bravado, and I think the bravado is a verbal one. Here's my opinion. Sure. Please. Trump was actually the one. Mhmm. The United States had presidency over the financial action task force when Trump was in office, and that's when they implemented KYC requirements for Bitcoin and digital assets. Now what happens if a country decides not to follow these requirements? Essentially, they get a negative rating. So the ratings follow a largely compliant, compliant, noncompliant, or partially compliant kind of rating system.
If you get a noncompliant or partially compliant, which are the two negative ratings, you know, will be assessed as a higher risk jurisdiction for antimony laundering depending on which requirement it is. So for example, if it's about the transparency of your legal entities in your jurisdiction, if you get a partially complaint on that, it means your legal entities are very opaque, which is a very high risk and could be very useful for criminals if they want to launder money. So that would be a serious negative rating. When your country receives a negative rating, typically, the FATF gives you a period to redress or gives you the option to say, well, do you wanna fix this?
While you're fixing it, you're put on a gray list. It's a it's a it's a period of observation. It's called a gray list. It's just a common term. You'll have time then to fix the situation. Right? You'll be reassessed after that. And if you still don't do it properly, then the global financial center centers and the TradFi, the traditional financial system in the world, then that kicks in. When you look at Moody's, when you look at countries a country's rating for for debt, when you look at correspondent and respondent banking relationships, all of those are based on largely on the FATF's rating system. So for The US, being in its own kind of class may not have that big of an impact because most worldwide jurisdictions have a correspondent relationship with The US. And so really, if The US doesn't follow it, we we're still gonna maintain those relationships. Right. But if you're the multiverse
[00:12:15] Shawn Yeager:
However,
[00:12:16] OpnState:
it is The US which has been the driving force behind the FATF.
[00:12:23] Shawn Yeager:
And why do you why do you think or why do you know that to be the case?
[00:12:28] OpnState:
Oh, I don't know that to be the case. I only know what I see. Right? And currently, The US and Europe are the two largest drivers behind the FATF
[00:12:38] Shawn Yeager:
work. And let me rephrase, and that was not to challenge your knowledge. Happy to do that if that if that comes to it. But what I mean by that is what is in it for The United States? What do you believe to be the incentives or the motivations behind taking the pole position, as it were, with FATA.
[00:12:56] OpnState:
There's a large number of benefits for a country to have this kind of a framework in place. One is the ability to ring fence or put some kind of limits on global financial transfers. Also, it gives you a certain is tax revenue? Well, yes. Yeah. I was gonna get there. Yeah. Please go ahead. Having perfect information, you know, we've talked about CBDCs as a community. I think people know what that is by now. We know the dangers of that. Well, essentially, if you use the traditional financial network through the main banks, if you use your bank account, you're already using something akin to a CDDC where the government has perfect information, is able to freeze your money without the process. The travel rule is something that's being implemented and still being implemented. It's It's problematic, but that was actually put in place while the SETF. Was under the United States presidency.
[00:13:52] Shawn Yeager:
And this is good to know.
[00:13:54] OpnState:
Right. So The US has been a driving force behind these KYC global standards. And I think the number one reason is control and information. What the point of that control, what the ultimate goal of that might be, that's subjective speculation. But having perfect information on financial flows, I think, is the number one reason. And being able to control them and to bypass due process. So the FATF and sorry. Financial the financial system KYC requirements are really a foot in the door to erode due process and erode our rights. Searching without a warrant used to be illegal.
Now it's perfectly acceptable for The United States to do it, for the government to ask a bank for all of your transactions or to be able to place extra legal, yeah, a toolkit. So all of that is actually possible today because of the FETF and the requirements that it requires countries to implement. For a different country, and I'm talking outside The United States, not following the FATF's requirements has immense consequences because of their relationship to The United States. The United States is essentially the main stick behind the FATF.
Most banks, if you're in Uzbekistan, you're in Uruguay, you wanna have a correspondent relationship with The US financial institution.
[00:15:27] Shawn Yeager:
Could you quickly, my background, I do appreciate and understand what a correspondent bank is and does. Could you could you give us a a quick primer on that and as to then why that is so important?
[00:15:38] OpnState:
United States was a global trade currency and take Uruguay, for example. If a certain industry wants to buy equipment or sell their product, it's not gonna be done in the local currency. It's gonna be done in the US dollar. So those businesses, those people need US dollars in order to trade internationally. And the only way to obtain US dollars is through a kind of clearing relationship with The US banks of JP Morgan, etcetera. So a local Uruguayan bank will have a relationship with JPMorgan, which will then allow the bank in Uruguay to obtain US dollars. And once the Uruguayan bank has them, they're able to give them out to the local enterprises so they can trade, etcetera.
So that is the implementation of the stick, and it's basically The United States that enforces this through their traditional
[00:16:34] Shawn Yeager:
banking network. If we if we back up a bit, and I do I am curious about this. So coming from it sounds like commercial banking prior to your role in in your government. How does one how did you not know what you were walking into? I mean, is it possible to operate in a bank and not already be buried in, compliance requirements including FADF and other? So, where where was sort of the disconnect between your role in commercial banking and then stepping in, you know, to the hornet's nest in my view, in terms of the need now to be part of implementing the standards and these regulatory regimes.
[00:17:12] OpnState:
You can't see me smiling right now. Are you are you saying that, judgment? Is that it? No. Well, one might one might charitably assume that that, you know, there was there was, maybe some some some hopeful naivete, but you tell me. Right. I'll I'll let you know what I saw from the banking side. If a new business wants to have a relationship with us, we needed to know who their owners were, who the directors were. We need to have KYC and all those people. We, as a bank, have perfect information on the accounts, the usage, the balances, the type of financial activity going on. We see through their financials, where they are, where they stand, etcetera. So a bank is used to receiving all the information it wants, especially if there's a lending relationship.
So for me, that's what I saw, and I saw the justification for it. Now going to government, that's when I realized that the government also obtains this information. And that's something I didn't know. I didn't know the extent of the anti money laundering requirements and what happens behind the scenes. And that's really why I created this NIM is so that I can speak out, speak freely, and just alert people that this is happening. It's getting worse. You have the CARF system, which is coming in 2020. Crypto asset reporting framework. Mhmm. That's spearheaded by the same organization that's responsible for the FATF.
Okay. Okay. You also have a global taxation framework that's being put in place for businesses, and they're also talking about a pillar three, which is a global taxation system for wealthy individuals. So once you kind of go behind the scene, I've sat in discussions. I've sat in with meetings with the FATF, the team that assessed my country, my my jurisdiction. I was part in defending my jurisdiction so we could get good ratings. I've put in legislation. I've assessed the requirements, identified the gaps. I've essentially delivered what my mandate is supposed to be, but something basically didn't sit right within me, and that's why I created this this new.
So looking at The entire system, it was a wake up call. It was a greater wake up call than what I lived through when I was a commercial banker. Much more worrisome for me, what I'm seeing now, than what I saw working for a bank. So there was some optimism, maybe some naivete. However, I'm glad I actually opted to choose because now, hopefully, I can do something about it.
[00:19:59] Shawn Yeager:
Absolutely. And it does make sense as you explained that that in commercial lending, the required information is inbound, is volunteered. You're not in a position where you effectively need to hover above and surveil and collect. It is willingly given to you because I'm a business that wishes to obtain a loan from you. So that makes a great deal of sense. So you are to sort of summarize and take this forward a bit, you're a civil servant implementing local implementations or or putting in place local implementations of global standards. You've touched on this.
What are some of the key observations that you can share that have shaped your view on how much damage these policies do, how much trust they erode between one's government and and the individual. And I'll add one thing. I I think there will be a percentage of the audience, and I've had previous conversations recorded on this with other guests, who I think understandably look at KYC, they look at the Bank Secrecy Act or equivalent, and they some would say naively, some would say, you know, in a good natured fashion, think, well, of course, You know, just like 2% inflation in The United States. Well, of course, that's the way it's done. So in speaking to those individuals who may not appreciate the gravity of these tools, these these global bodies and their rules, What have you seen that is a wake up call as to how they are a net negative, assuming you believe they are?
[00:21:32] OpnState:
I'll take an angled approach to answering your question, if you don't mind. Please. By stating that your ancestors and the DNA that allows you to live today, that comprises who you are as a as a person, as a human being, that DNA comes from a long list of ancestors. You can go up back ten thousand years. Those ancestors have lived through everything, war, famine, viruses, black death in medieval times. One thing that is instrumental to you having the life you have to live today is your ancestors fought for due process and a respect of rights, which used to be a kind of a foundational part of The United States.
[00:22:16] Shawn Yeager:
Sacrosanct.
[00:22:18] OpnState:
Right. So, you know, expression, the right to property. Right? Benefiting of safety, being safe, and being respected and not having somebody know everything about you and not having somebody put you to jail for no reason without telling you first and allowing you the opportunity to defend yourself. We take those for granted, but they didn't just arrive. It wasn't the government that gave those to us. It was our ancestors who fought for them with their lives quite literally. We all have ancestors that fought, at least in the Western world or even in Eastern world. We all have ancestors who fought for something they believed in, to implement a foundation of rights in order for their children to have a better life.
If you look at AML and KYC today, it might be small. It might be acceptable. However, it is an erosion of those rights. And the erosion, once that crack is is put in place, it's never going away. You know that you have to remove your shoes when you take an an airplane. You have to go through that machine where you have to raise your hands because of the state of emergency that started in 09/11. It's being renewed every year. Since. That's what allows that because you have a right to have somebody not search your bags. They need to have a warrant to do that, or they used to.
[00:23:45] Shawn Yeager:
Never let any tragedy go to waste, as they say.
[00:23:48] OpnState:
So so that crack is a an erosion of the rights that your ancestors fought for that many people today don't really value much because they take it for granted. Yes. And it's only when it's lost, of course, that you realize what you had. So the ability for you to transact, the ability for you to speak your own mind, the ability for you to be able to buy things that you want, to say things that you want, to criticize the government, all of those things are based on these rights that are being eroded today. The UK has set up legislation that's criminalizing speech, Germany, even The US to some extent, Canada certainly.
And so, really, to the people who look at KYC and don't get angry, that's fine. I respect every single human being out there. However, there has to be some awareness of the erosion of the rights that were given to us by our ancestors who fought for them, and we have to take that gift and
[00:24:58] Shawn Yeager:
I very much appreciate that perspective, and I think it is very important to point that out that it was not always this way, and it was dramatically different. I mean, there are films, novels, chronicling of history in the not so distant past where we traveled without passports. We, you know, which would be a hot button issue certainly in The United States these days, but that we could conduct international commerce that, God forbid, you had a Swiss bank account. Right? And, I know my perspective, my views on these things have evolved, but I think as you're as you're pointing out, this ultimately comes down to our ability to think, speak, act, transact freely, and so much as we are not, you know, violating the rights and property of others. And, you know For for somebody who's new to this, I mean,
[00:25:46] OpnState:
you know everything about a government. You have democracy, and you have transparency. But if the government knows everything about you, you have a very high probability of tyranny. Awesome. And and there's an asymmetry between how much the government knows about you and how much you know about the government. Whereas the government has been putting in place powers and legislation through the FCTF and other, like, other organizations in order to have that Information. The the ability of citizens to know about the government is relegated to some FOI laws that were done dozens, you know, fifty plus years ago in most jurisdictions.
So those FOI laws need to be revised. They need to be updated. You know, if you ask me what an ideal FOI law is, is to have a law that says that everything that a government civil servant elected representative does has to be made public, and there's a timer. So things that aren't highly critical are made public right away. So people can look at their elected representative's email and say, alright. Well, what what has this person been saying, etcetera. Everything that you send to an elected representative, you have to know that it will be made public.
For things that are very sensitive, like this attack on Iran, you don't want people to know that right away so you put a timer. And the timer has to go through checks in order to be obtained. Once it's obtained, you've proven that it's a time sensitive critical issue that people can't know about, then maybe it's released in five years, but it will be released. Absolutely nothing that government does should be kept a secret. Nothing. And, ultimately, it's just a matter of time. Because if you look at the JFK files, you look at whatever investigation the FBI does, ultimately, after fifty years, is it still critical, time sensitive? And the answer is yes only if people acted wrongly because they wanna hide what they did. If people did what they did and they followed the law and they did so in good conscience and there's no negative foul play involved, they won't mind if it's made public.
In the end, it's just a matter of times. Those FOI laws really need to be updated. Do I think it's gonna happen? I see in my ministry, in my department, I see an inherent assumption that the government has the right to know absolutely everything about its citizens. Right. It's not even something that's discussed. It's not it's not even brought up as should we. It's, well, we need to know this. Let's do it. And and with that information comes immense liability potential for for misuse.
[00:28:42] Shawn Yeager:
Certainly. Breaches or or otherwise. Absa. We see this we see this every week, it seem. Yeah. And I think what's particularly what the takeaway for me, and I hope our audience is for this, is the remark that in a true democracy, the government knows little about the people, the people know everything about the government, and the inverse is tyranny. And I think that is that's the call to arms to me is that we can observe, I think, easily, readily that we are in a panopticon. We as citizens, as individuals are in a complete and total panopticon as classically defined, where the government fights for the minimal amount, performative transparency.
So the question I think, you know, is what have you what have you seen that has most ignited or informed your perspective? I don't know if you care to add any any particular examples. Again, I know that can be touchy, but I think you have more than adequately addressed at a macro level why the inaction, or enacting of these of these rules and these bodies is is a tremendous problem.
[00:29:51] OpnState:
I mean, there's a lot of different threads that I could pull here. Let's just pull on one, say, incentives. And there is one that I do wanna pull, and, you know, I will use the the opportunity to speak with you to kind of release something that's been near and dear to me for for a while. Oh, yeah. But let's just start on incentives within government. For a civil servant like me. Right? Now some civil servants, most people are like, they're getting paid a lot of money. They have huge pensions. They have all these benefits for working within government. Yes and no.
Most of the money is made when a civil servant goes back to private sector. Sure. The revolving door. They'll use their experience, their connections within the government to sell themselves, and that's really where they make the money. Every civil servant knows this. The career civil servants that are enrolled for ten plus years are very dedicated to their work, and those are my colleagues. They're very dedicated. They go to the training. They're told anti money laundering is a requirement or else criminals will misuse our banks, our real estate.
They'll do crooked things. Mhmm. We don't want that. And so they are really dedicated to ensuring that their jurisdiction isn't used for money laundering and other things. They feel like they're fighting a good fight. I presume. They're fighting a good fight. And and a lot of them are not getting paid that much compared to the private sector.
[00:31:16] Shawn Yeager:
And so No. That's the default in The United States. It well, you know, when you when you open that up, I'll just say that in The US, I think, unless you're at the absolute top tiers, it is the backroom dealings and the and the second career where you make your money.
[00:31:28] OpnState:
The the incentive then is to build relationship with the private sectors. It's to build relationship with the people you're meant to Regulate, to limit. You have these big companies that come in and they want something. They'll lobby for something. As a civil servant, you're gonna meet somebody up for supper at a conference. Really, what's going on behind your mind is, how can I sell myself to get that big contract from this person in front of me? And so the incentive for a civil servant, other things as well. For example, being sent to Hawaii or Paris for a conference, going to a five star hotel while you're at that conference, getting all your meals paid.
Those things are what incentivize civil servants. And so that's wrong if you ask me because people will act in their own best self interest. And in this particular case, it doesn't align with the interests of the citizens if you ask me, in my opinion. And so that's the incentive system. If you ask me what a good incentive system should be, well, I think all civil servants should get a bonus Yes. GDP per capita in a jurisdiction window. And it should be directly proportionate with the increase in the wealth of citizens. And you could do this you could do this on a gross or net, you know, after inflation,
[00:32:52] Shawn Yeager:
doesn't matter. That that's But you anyone I would just say anyone who's worked in sales as I as I have and do, you know, that's that's a team bonus. And, generally, it's an individual bonus, but in the case of being unable to measure individual contributions, you can at least measure the contributions of the team to the goal, and you get a proportionate
[00:33:09] OpnState:
participation in that. So once again, you know, private sector, obvious, government, it sounds like it would be quite novel. It would be novel and it makes complete sense for a civil servant to get a bonus if the people are impacted by the laws that the civil servant puts in place or creates or the policies that it suggests. If the population's doing well, if the businesses are doing well, that should bring about a bonus, but there's no such incentive program in government. And so the first thing that that's one of the things that I realized. Right? The incentives are all wrong. And I saw the incentives in the banking, my banking career. Right? There's all those sales. It's all about doesn't matter what the business should have in terms of leverage.
Increase that loan to the maximum. Right? So in But there is something else that I've realized that really weighs heavy, and I haven't spoken about this in any of my other presentations, is I think having a government that is trustworthy requires the involvement of its citizens. And that, I find, is probably my perspective from within the government, looking back at a population that delegates political power, the only thing they'll do other than discussing it with their neighbor or friends is go to a voting block, tick up one of the names there, and put that ballot in.
And that's, for most people, the extent of their involvement in the political world. At least the extent of their involvement that has any impact, however little that is. And that's something that I see. Now I've created legislation. I've created legislation. I didn't like what I was creating, but we have to consult on it. So I sent the legislation. I did the consultation process. Nobody commented. Nobody raised their voices. They probably read it as a lawyer, as an accountant, whatever your profession that person was, they read it. They're like, oh, I need to adjust this and this and this. My business plan needs to change for this new law. So they they took it if I hear you, they took it as,
[00:35:23] Shawn Yeager:
a settled matter, and I'm now going to react to it as opposed to attempt to affect or change it.
[00:35:30] OpnState:
Exactly. What I really wish would've happened is for the calculation of my jurisdiction to look at that law and go, wait a second. What's this? And I've spoken to people on the side saying, well, you know, have a look at this consultation. I've pushed them. You know? The little that I can, I've pushed them. But they still don't speak up. And they don't speak up because of an inherent fear of speaking up or just the belief that they don't know political things or legal things or laziness. And I have to admit, sadly, that there is a lot of laziness Absolutely.
The general population. And let's just admit it. It's easier to watch Netflix than it is to look at a consultation.
[00:36:18] Shawn Yeager:
Yeah. Laziness or fatigue. And so a a related question, if I may, I you know, I'm thinking about my own sort of relationship to that. I think, for me, certainly, I presume for a lot of my fellow Americans, there is a sense that it is screaming into the void, you know, that sure the FCC may post on some terribly designed fcc.gov site, for commentary, but, you know, it'll get lost in the void or it is just so cumbersome which can be written off to laziness. So the question I have, do you do you believe there is something particular to your jurisdiction where they are better at or more attuned to listening Or are are you perhaps advocating more broadly that we just as citizens need to need to take that opportunity because it is under under Application of global standards.
[00:37:10] OpnState:
For example, the BSA. Say you want to start a campaign to abolish the BSA. Look at Let's do it. Adele. Let's do it. I'm looking at Adele right now. Absolutely.
[00:37:23] Shawn Yeager:
But
[00:37:24] OpnState:
assuming you wanna do that, you're gonna send letters. You're gonna lobby. You're gonna talk to representatives. Let's say you talk to senator Lummis. Senator Lummis is this is a great idea. Let's do it. And senator Lummis is able to convince magically everybody, everybody around her, all of her other life. Just a miracle. She's able to do that. Indeed. Now In order to affect that change, the jurisdiction has to look at the consequence of abolishing the DSA with respect to the global standard setting bodies and the requirements on the standards that they put in place. So now The US has to say, what do we lose by doing this?
Well, we lose something that we fought to implement for the last fifty years, since 1991. Not only that, we're also harming our banks who won't have access to all the anti money laundering beneficial ownership information, which is a huge honeypot for banks. Let's be honest. Sure. And we lose information on taxable activities that our citizens are doing. And even if they get through all of those and they say, we're willing to assume the risk, then the decision has to be made. Well, do we remain in this global standard setting body like the FATF? Or do we leave it? If they choose to remain, which I think is really whether to remain or leave is really a decision that The US has. No other country in the world has that option. Now if they choose to leave, great. I mean, fantastic. But then they'll have there'll be severe consequences.
Most jurisdictions don't have that option, so they they stay. Okay. Unelected bureaucrat like me goes to an FETF plenary and then has to raise their hand has to raise their hand. And go, well well, actually, my government has this opinion now. We shouldn't be doing KYC. We shouldn't be doing this or that or that. There's 40 other countries in the FATF membership that you have to convince at that level in order to remove that requirement. So not only is it a miracle for Lummis to have convinced everybody in The US. Multiply that by 40. Right. All that effort times 40.
Because now you have to to convince a majority of these well, 20. You have to convince a majority of those other jurisdictions to remove that requirement. So this is a centralization of policy making and development, and that centralization essentially removes your ability to have an impact or say on what you have to what what governs you. This global these global standard setting bodies, there are global standard setting bodies for all consequential policy in the world. Doesn't matter what it is. Even fruit the OECD has a fruit standard on how banana should look.
Of course. It's important. You don't want a banana to have less than two and a half fingers with so that the you know, to be able to peel it. There's global standards Central planning. Central planning. Global standards for everything of consequence. So that's the process that a country has to go through if it wants to abolish the DSA. So I look at those initiatives and really The US leaving the FATF, which I never believe it will do because it's the linchpin, the strongest pillar. It's the foundation of the essence, but it has to be either all the other countries leaving or a majority of them leaving or The US leave. And if The US leaves, I don't even know if that will be sufficient
[00:41:29] Shawn Yeager:
to Interesting. The world. Yep.
[00:41:31] OpnState:
Just like the the World Health Organization, US leaving, not sending funding, somebody else comes up. It's the Hydra. There's another head. And so how do we get rid of this?
[00:41:42] Shawn Yeager:
That is my next question. If I knew, I would lobby for it. Right. Right. Because because I think, you know, as as as we're going through this conversation, and we have wonderfully touched on many of of the questions I had made note of, you know, there are, in my mind, the perspective of can you change it from within, and I think you're making, a sound argument as to the high improbability of that even if The US was to flick that first domino. And, you know, American exceptionalism, guilty, but I might have assumed that you were going I was hoping that you were going toward if The US went, if if senator Lummis, pulled off that miracle, it's the single miracle that could bring down the Jenga, but it sounds like no. And so we're left in my mind. This is where I'd love to spend the next bit of the conversation. What else, if anything, can be done? You are inside. Presumably, you're working, you know, toward toward the the effect that you can have, or must we necessarily exit through Bitcoin or other means? So let's let's sort of move into that. What what can be done
[00:42:44] OpnState:
other than complete exit? What can be done other than complete exit? I look at the cypherpunks, and I look at the creation of Bitcoin and other technology. The Internet's a big one. It's bigger than Bitcoin. Mhmm. Internet originally, companies lobbied to ring you wanted a ContiServer, an AOL, or they they they logged in and worked really, really hard to make the Internet something that's very controlled.
[00:43:16] Shawn Yeager:
The original walled gardens.
[00:43:18] OpnState:
The walled gardens. Now in the battle for the Internet, we won. In terms of being able to access information, now you have Internet service providers all over the world. But there's also a centralizing trend with Internet service providers now. Taking as an example, Starlink. Starlink is now responsible for a sizable contribution or access point to the Internet, and that's a centralizing force. When Musk goes away and the next CEO comes about and says, well, I don't wanna give this country or that country or this person access to the Internet. So the Internet now is and we look at big companies. The Internet is essentially Google and Facebook and a few countries it's not countries, organizations, companies. And the Internet is centralizing little by little. So the Internet is a good example of what we could do financially.
We created Bitcoin as a protocol. We're able to transact. But now we're seeing the Bitcoin sector being integrated within traditional finance, and that's being done through legislation that many people in the Bitcoin economy are are lauding. They're very, very happy that Absolutely. No question. Their their their JPMorgan bank in custody Bitcoin is amazing, and they're clapping their hands. That, to me, is worrisome because it's the same effect as Google having more centralized power within the and at one point, I'm not saying right away, but at one point, through legislation, through lobbying, through criminalizing certain activities, having self custody Bitcoin may be seen as something that could lead to money laundering and therefore should
[00:45:15] Shawn Yeager:
be controlled. Had we had a different outcome in our last presidential election, undoubtedly, we would be there or close to it, and we we may still.
[00:45:23] OpnState:
I've the last five years, I've seen unhosted wallets as a term coming up more and more Absolutely. Within the FETF discussion. Unhosted wallets. And so the FETF functions in a very odd way. They can't dictate directly. They can't say, well, this is what you should do. They can't say that. What they'll do is they'll send questionnaires. They'll send questionnaires, and this is one that I've seen, for example. It sent a questionnaire. The questionnaire asks about the risks that we've assessed within our jurisdiction related to cryptocurrencies, virtual asset services, which is the term they use. And they'll ask a question. They'll say, we've assessed the ability to hold cryptocurrencies and unhosted wallets as high risk. How is your jurisdiction mitigating?
[00:46:16] Shawn Yeager:
Presumption of guilt.
[00:46:19] OpnState:
That that was a verbatim question that I saw. And now my jurisdiction was put in a situation where they had not only to assume that there was a high level of risk and acknowledge it, but also think about how those risks were gonna be mitigated. And that's how the FATF works.
[00:46:40] Shawn Yeager:
Right. So they seeded they seeded the idea of the unhosted wallet, which is this ridiculous misnomer to begin with, and they follow it up with, well, naturally, we know that this is unsavory, and so how are you going to solve for this problem that we just created?
[00:46:54] OpnState:
So I'm gonna answer your question, how we can best effect change, either from within or by accident. And I'm going back to really the two fundamental principles that are needed for a government that is I'm not gonna say trustworthy because I never think you should trust a government. But that would make an a government accountable, increasing the transparency of what happens within that government. So revising the freedom of information laws, fixing the incentives, and for the population to be and that is the only way from within, quote, unquote, that government will improve and where we will be able to regain the freedoms that we value, if we value them as a society. Because is an excellent it's very fair to point that conditional out if we value them. And so those are the things that I would do from within.
But I look at the cipherpunk, And if Cypherpunks created Bitcoin They won't. Real disruptors. They didn't disrupt the financial the TradFi, the traditional finance from within. They disrupted it by creating something. And I think that is a key to effecting change in our society. It's not to try and work from within. Working from within may achieve some ends or goals or objectives. We will ultimately create real change by creating something better that completely negates the old system. And this is something that is possible for a government.
I wrote a fairly large paper about a decentralized regulatory framework.
[00:48:42] Shawn Yeager:
Yes. I'll be sure to link to that. It's based on game theory.
[00:48:47] OpnState:
It's based on leveraging the self interest of the regulated entity in order to create incentive to remain within certain regulatory requirements. That's also possible for government. We don't need to have a top down stick gun to your face boot on the boot on the head, approach to regulation and supervision, and governance in we are at a point where we have the technology. We have the ability to create tools, any new governance system will create a government that is completely transparent. If you look at two hundred and forty years ago when the US revolution happened, The constitution created this amazing framework that worked at the time.
It guided a population that had similar values, similar desires, and it created a foundation that enshrined those values and those desires. And because you didn't have telephones, you had to communicate through couriers. It was very localized. It didn't make sense to have everything done in Washington because it would take weeks or months to get there. And as the technology for communication improved, so too did centralizing government functions. It doesn't make sense to have five people in every state doing a function where you can have 10
[00:50:20] Shawn Yeager:
in Washington doing the work of hundreds. And so Although although in practice, they get both. Now they get both. They get to have the employees at the state level in the fed, but I take your point, but I take your point. Cynicism. You know, you're you're welcome, too. Yeah. It is. And so when by this change in communication,
[00:50:35] OpnState:
we've had a centralizing force, and we've also had a polarizing of society. I don't even know today if The US citizenry and I'm talking about The US because it's a I assume people people will be watching this or or from there. I don't even know that The US society has a common ground set of foundational beliefs and values that can unite the entire country. When it comes to immigration question right now. If you look at immigration, if you increase immigration, you satisfy 50% and anger the other 50. If you restrict immigration, vice versa.
If you allow guns, you satisfy 50%. If you allow drugs, marijuana. You you and so Decriminalize. And you can't have I mean, libertarians are all about central localizing governance. However, think about it. If you have immigration policies or gun policies where one state allows guns and another state completely bans them, you need suddenly to have a a frontier, a barrier between them, and you need to search all the vehicles going back and forth to make sure the guns are not going from one to the other. Is that so you can't really localize.
And it used to be something that the entire population, I assume, or a large part of it, agreed with. Citizens have the right to bear arms. Mhmm. And it worked. However, society's norms and values have changed, and there's a polarization of values and and opinions. And so I don't even know now if there's a common ground sufficient common ground to reestablish some kind of federal government without alienating 50% of the population.
[00:52:27] Shawn Yeager:
Yes. No. It's a great point. There is a there is a political cartoon, I believe, from The New Yorker that I often post, and it was it was printed just just after 09/11. Janek is the fellow's last name, and it it, uncle Sam is at a table, and the person behind the table is getting ready to wrap a gift, presumably. And behind him is stop terrorism and protect the children. And the gift in question, from the perspective of uncle Sam is a corporate control of free speech or Internet speech. And so the point being, how would you like this wrapped? And so to your point, I think that is where we are largely in The US is everything is a poll. One of my prior guests, my first guest, John Raab, writes a lot about tribes and swarms as it as he calls them, political swarms, the red swarm, the blue swarm. And so it is an excellent point that to arrive at consensus will be very difficult here, but let's take it here. Where, if anywhere, be it looking to your, your paper and your proposed approach, or otherwise, have you seen bright lights? Are there jurisdictions where you're seeing them move toward the kinds of transparency, the kinds of accountability that you see as being a viable option, again, other than just individuals exiting by way of Bitcoin or otherwise?
[00:53:50] OpnState:
Well, the financial action task force global standards have to be implemented. I think it's a 127 different jurisdictions. And so I may just point to one of the jurisdictions that isn't implementing those standards, but they're not places that you wanna live. North Korea and whatnot. I wouldn't take that trade. On a on an anti money laundering front, all jurisdictions are complying. You look at El Salvador. I was in a a meeting with other financial action task force. It's actually part of a different portion. So I was sitting on that particular meeting. It's called The Caribbean. They were actually lauding El Salvador for their efforts to prevent anti money laundering and financing of terrorism and increasing transparency, which basically means gathering more information and holding it, the government.
So El Salvador is complying.
[00:54:47] Shawn Yeager:
It's just their digital, digital asset committee, I believe it is. I've done a bit of work with a couple of entities there, is complying harder to to put it one way.
[00:54:57] OpnState:
There was one shining light that I really loved, and few people know about it, and that's Taiwan. If you look at the Taiwanese minister of, I think it's innovation, it's it's an ex hacker that got elected. And she really had some amazing ideas to make government more transparent. It was beautiful. I think there was opposition. However, that opposition would have been moot if the population had embraced and participated. Mhmm. And I don't think that her programs got the participation she was hoping for, and so the programs got let down. You should really, really know.
Look. Chang Tam, Theresa Tam. I I I forget the name.
[00:55:47] Shawn Yeager:
Yeah. Get them in the show notes.
[00:55:49] OpnState:
Now if you if you look at what her IDs were, she had the idea of using an online polling platform called Polis, p o l I s, to put every single consequential decision and to create a communal type of discussion for policymaking. Beautiful. Wonderful. I don't think it got the traction that it needed to move forward. And that's the biggest disappointment working from within the government. That's what I've seen is that the population don't get involved. The government might wanna do something, and they don't know in the case of Taiwan. I'll admit I don't live there. This is one place I'll admit to not living. However, I don't know what the reasons were, but the people didn't really participate.
And that's a shame because countries that are doing the right steps should be encouraged, lauded, and applauded. And I see so very few. I certainly don't see any in Europe. I I can't say that I see any in Central America or North America. And, you know, I'm not that familiar with African countries, but I assume they want global capital investment money. And so they're complying harder than anyone else. And so don't know that there are any lights out there, but I do know that by being involved in government, it's the only way to light that torch.
People watching this, don't get up. Send freedom of information requests, push back, complain, criticize, question, doubt their government, their elected representative in an active fashion. If they can get away with catering to lobbyists, that torch isn't gonna be lit. And, really, the key to maintaining our freedoms is that participation. I'm seeing very, very little of it.
[00:57:52] Shawn Yeager:
Well, I'm assuming you're you're, you know, you're wearing that hat for a reason. So I I take your point, which is clearly there is no silver bullet. There is no magic pill. What I take away is that Fadif is the playground bully who leads others to give the beat down anytime anyone gets out of out of line, and so the ability to escape that is is minimal. But I think if I understand you correctly, that it is creating, forcing more transparency through freedoms of information act and other means. It is citizenry participating and voicing and and adding pressure.
[00:58:30] OpnState:
Advising the freedom of information loss is that. Odell or if anybody wants to really make a change within government to really open things up for more transparency because transparency kills criminal activity. Cockroaches love to hide from the light. So with more transparency, you fix everything. You really fix everything. And those freedom of information laws are antiquated, and they haven't been looked at. And very few people, first of all, send freedom of infra of information requests. It's free. You can. If you wanna see where your congressman was last month, you can get their calendar. Every single email I write when I'm at work is a flyable. There's a huge amount of information that's obtainable by citizenry, but it requires time. You have to read it all. It's it's it's just that involvement that's necessary. But now with AI, we can have scanning of a whole database.
So, really, there are opportunities, but that legislative change, I really think the freedom of information request legislation around the world has to be updated. The fact they're there is great,
[00:59:46] Shawn Yeager:
but the government right now knows so much more about us, and we know so little about it. It's a great point. I'm reminded I'm not on Twitter x anymore, but I I see, you know, I get a link now and then, and there's an individual who goes by data republican, lowercase r, as she says, I believe, who is a data scientist and is, I think, using open source intelligent largely, open source intelligence. I don't know that she's conducting FOIA's, but I believe in my mind is a great example to your point of applying modern tooling to being able to rebalance what would otherwise be overwhelming in in the case of the data you would receive from a FOIA. And I will, I'll be sure. I know you're watching this, Odell. So here here's a shout out to him. So, you know, might have thought that you were moving toward a place where you're doing what you can, but your expectations are low. I don't now believe that's the case. I'll get you to correct me, you know. So you're not gonna you're not gonna be in Madeira at Sovereign Engineering, walking away from you from your government job in the near future, or or are you? So so let's let's wrap up on these two points. What is your best case expectation of your work in your current role?
And then for those of us concerned, I hope more and more about maintaining our privacy, our autonomy, what are some of the most effective steps that we can take to protect ourselves, to have a bit more agency in light of everything we've discussed so far. So what is a great outcome for you, and what is a reasonable expectation and steps we can take as individuals in your view? I have to have a problem. If you take a candle
[01:01:28] OpnState:
and you bring it outside at daytime, that candle will have a very small amount of light. You won't you won't notice the candle. If you take the candle in a dark room, that candle can shine. That's really my moral justification for the work that I'm doing. I've done presentations on for ministries and departments within my government, and I see look looks from people who aren't willing to speak out but think the same way I do. When I make a reference to something, when I say a particular word that implies something on freedom, privacy.
And I I see those looks, and that's those are the torches that I'm looking at lighting with my small little candle. It's very rewarding to hear someone else in my department echo something that I've said multiple, multiple things. So that's that's for me. That's the work I'm trying to do. As far as you or anybody who's dissatisfied with their government, the most the easiest thing you can do, say your elected representative did something, purchased something, or took a certain action that you disagree with, send an FYI requesting all of the emails that pertain to that particular purchase or action. Say it's buying spending money for a new building or a new program or a vote that your elected representative took that you disagree with, say, well, I want all of your emails over the last year with this keyword. It's gonna scare the bejesus out of your civil servants and not just from your elected representative.
Ask it for all civil servants within this particular department. Within all All the government. It would scare the bejesus out of me if somebody f lied me, and I've seen this happen. By knowing. And it's it's something that civil servants forget when they send an email, when they get an email. That's public information. It's just not disclosed, and so few people ask for it. They don't know all the emails that they've written over the last year, what they've said, what they haven't said. So when you send that FOI, you might not get what you're looking for. But just the fact that you sent it, the the department everybody in the department and your representative will know you sent it.
And even if they find a way not to send the information to you, you scared them. Try them in a light. Use and believe me, it works. Next time somebody needs to take an action, write it at that email, sign that contract, go to a particular meeting, conference, they'll think twice about it because they know. They can come back and bite them. Send freedom of information requests. It's free. It's easy. It's a form. It's an email.
[01:04:39] Shawn Yeager:
Excellent. And I think it is you know, I'm as guilty as anyone of perhaps assuming that the guidance would be use this VPN, transact in Bitcoin more. But I think it's an excellent takeaway, which is it is unavoidable that in in order to push back and enact change that, to your point, we have to remind them, you know, of of ways in which they can be held accountable. So I think that's excellent, and I am just as guilty and will take your advice to heart. Just tell me what I'm doing. Okay? Wouldn't know where to send it, so that's great. Open state, thank you. I am grateful for your time, grateful for your contributions. I appreciate that what you're doing is not without risk, personal and otherwise, so thank you for that.
And I will be sure that we get links to your Nastro profile, to the paper you referenced. Anything else that you'd like to point people to that would be useful to learn more about your work or the tools or the techniques that you've talked about?
[01:05:36] OpnState:
Send you the link to the Taiwanese minister that I referred to. Terrific. People if if people are interested in in seeing what positive changes of change could look like, she's a good example.
[01:05:47] Shawn Yeager:
Yeah. A firefly is is sometimes all we need. Fantastic. Thanks again, OpenState. All the best. Talk to you soon.
[01:05:54] OpnState:
Cheers. Cheers.
Introduction and Guest Background
Disillusionment with Banking and Transition to Government
Role of the Financial Action Task Force (FATF)
Compliance and Global Standards
Inside Government: Realizations and Challenges
Incentives and Government Transparency
Potential for Change and the Role of Technology
Global Compliance and Bright Spots
Steps for Citizens to Protect Privacy and Autonomy
