From BYOB to BYCTB: How Centralization is Changing Bitcoin’s Core

May 18, 2024 | Cryptocurrency

Bitcoin’s transition from “Be Your Own Bank” to “Bring Your Coins To The Bank” highlights the growing infiltration of centralized control into its decentralized ethos, threatening financial autonomy.

The allure of Bitcoin has always been undeniable: break free from the shackles of central banks and welcome the age of anonymous, self-directed money handling. This idea was aptly captured by the motto “Be Your Own Bank” (BYOB), which encourages individuals to seize control of their own financial fate. But new stuff is making it seem like Bitcoin is moving away from BYOB and toward “Bring Your Coins To The Bank” (BYCTB). That’s alarming!

Bitcoin’s Cypherpunk Origins

The cypherpunk movement, which supports decentralization, anonymity, and free money, is where Bitcoin was born. Blockchain, the underlying technology of Bitcoin, allows for decentralized, peer-to-peer transactions. Anyone may become their own bank thanks to this, as no banks nor governments are required. Bitcoin promotes trust decentralization via its cryptographic protocols, which guarantee secure and transparent transactions.

Bitcoin provided a glimmer of hope for people in areas plagued by political persecution, economic instability, or insufficient financial facilities. Protecting money, trading internationally, and avoiding government meddling or censorship were all made possible by its ability to transcend conventional financial restrictions. A revolutionary call to action for financial self-sovereignty, the notion of “Be Your Own Bank” was more than simply a slogan.

The Spread of Top-Down Management

The Bitcoin ecosystem is showing signs of centralized institution penetration, despite its decentralized ethos. There has been an effort to incorporate Bitcoin into the traditional financial system through the implementation of regulatory frameworks, especially in the US, which undermines its initial intent.

U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 121 (SAB 121) is a prime illustration of this. Entities that have digital assets in their possession are required by this March 2022 guideline to record these assets as liabilities on their balance sheets, with a matching asset being valued at fair market value.

Subverting Decentralization: SAB 121

When compared to the usual treatment of custodial assets, the requirements of SAB 121 are striking. Historically, banks have maintained a clear separation between their own assets and those held for clients by excluding custodial assets from their balance sheets. Financial institutions that handle digital asset custody will have their capital and liquidity needs affected as a result of this shift, which SAB 121 is imposing.

Some think the SEC should have consulted prudential banking authorities before providing this guideline, and they think the agency overstepped its bounds. The fact that SAB 121 is considered a rule under the Congressional Review Act by the Government Accountability Office further complicates its classification as just advisory.

This past week, the Senate passed legislation H.J.Res. 109 that would overturn the SEC’s Staff Accounting Bulletin (SAB) No. 121, preventing highly regulated financial firms from custodying Bitcoin and other cryptocurrencies. The legislation passed with a vote of 60 to 38, demonstrating bipartisan support for the measure. Under the Congressional Review Act, H.J.Res. 109 seeks to remove these roadblocks, thereby enabling highly regulated financial firms to offer custody services for Bitcoin and other cryptocurrencies.

The Danger to National Financial Independence

Now that bot the House and Senate have voted against the adoption of SAB 121. As of now President Biden has come out against it but it’s just a matter of time before he’s persuaded by Wall Street to change his mind. As we witness the slow and gradual capturing of the digital asset space one has to wonder. Was this the plan all along? The paradigm is changing from financial freedom to increased reliance on established banking institutions, and this tendency threatens to weaken the fundamental ideals of Bitcoin.

One could have saw this coming a mile away when the Maxi’s started rooting and cheering for the Bitcoin ETF’s earlier this year. There’s no way you can just have a ETF product without including the traditional banking system into holding those same investors funds as well.

The banking industry’s trade groups have spoken out, asking the SEC to keep disclosure requirements reasonable while removing these burdensome balance sheet rules. Proponents of the current regulatory system contend that custodial assets are adequately monitored, making the provisions of SAB 121 unnecessary and even harmful.

Finally, be on the lookout for attempts at co-optation.

There will be attempts to water down Bitcoin’s principles, thus the community must be on high alert as the cryptocurrency develops further. As the slogan “Bring Your Coins To The Bank” replaces “Be Your Own Bank,” a turning point in the history of digital assets has occurred. Main priorities should always include protecting Bitcoin’s decentralized nature and giving people the tools they need to keep their own money. To achieve this goal, it is necessary to fight against legislative overreach and promote a middle ground that allows Bitcoin to maintain its creative nature while addressing valid concerns regarding transparency and security.

To keep its revolutionary promise, the Bitcoin movement must essentially fight against the creep of centralization. In an increasingly regulated digital economy, it is essential to do so if it wants to maintain its position as a champion of financial independence and liberty.


Will the Bitcoin community be able to resist the regulatory overreach and preserve its foundational principles of decentralization and financial autonomy? Leave a comment…


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