The alleged illegality of crypto and of those who use it is, again, divided by the state into two clear categories.
First and foremost to the state are violations of its own self-declared jurisdiction. Given that the state produces no wealth, its claimed jurisdiction amounts to the rules by which wealth is confiscated and redistributed. Crypto violates these rules. Some uses do so directly. For example, it is sometimes used for tax evasion, money laundering, black-market activities, and other functions that compromise the state.
Of course, people who use fiat also commit such ‘crimes.’ In those cases, however, there is a remarkable difference in how the law approaches the offenses. Namely, objectionable individuals are demonized, often in a high-profile manner that intimidates those in the shadows. But the money itself is accused of no crime, and bears no liability. With cryptocurrency, both individuals and the money are demonized. The money is the true target, with individuals being the means by which to attack its legitimacy. Prosecutions springboard quickly into calls for monetary control.
Crypto also violates rules of the state in a more profound manner. It renders trusted third parties irrelevant, and there is no more massive third party than the state. The state created the central banking system as an omnipresent regulator of money and as a choke point for information. It wove an iron web of laws to monitor money and require its ounce of flesh from every transaction. If no one needs central banks, if they can easily avoid the strangling laws, then the power of the state dramatically diminishes. Some crypto zealots argue that the power is or will be destroyed. In either case, crypto constitutes a threat as muscular as any other revolution. Perhaps more so. No wonder, the loudest cry of “there ought to be a law” revolves around the preservation of state privileges.
The second round of the state’s cry for law is the claim that crypto violates the person and property of individuals. The line of attack is secondary, by far, and often sounds like an afterthought. But it is also the most dangerous claim to the continued freedom of crypto users because the accusation is valid, and it resonates with decent people. Most people hate taxes, and many would avoid them if it were safe to do so. But the same people hate fraud, theft, and violence.