The New York Times columnist took a victory lap this weekend when the International Standards Organization (ISO) created a new merchant category code (MCC) for credit or debit card purchases at gun stores to make those transactions stand out. Until now, such stores have been included in the broader category of sporting goods stores (code 5941, should you be wondering).
For years Sorkin had been advocating the creation of such a code to help financial institutions flag suspicious activity in the hopes of preventing mass shootings, and criticizing Visa (V) and Mastercard (MA) for resisting such calls. His campaign followed a Times investigative series on the unwitting role the banking industry played in financing such massacres.
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Amalgamated Bank, the union-owned New York lender, applied for the code’s creation earlier this year, was rejected, then tried again. In the wake of the May school shooting in Uvalde, Texas, the second application succeeded. On the eve of the code’s creation, Sorkin declared that it would “test the resolve of business leaders and their commitment to American lives.”
Never mind that gun buyers trying to fly under the radar now have an incentive to pay with cash (or perhaps cryptocurrency, where it’s accepted), or to make the purchase at Bass Pro Shops rather than a specialist firearms retailer.
Never mind that, as Sorkin acknowledges, it’s an open question whether the code will be used. That’s up to the “acquiring” banks that plug merchants into the card networks. Shrewd acquirers, subject to audits by Visa and Mastercard, might advise gun-shop clients to start selling tents to justify using a different code.
Never mind that, depending if the code is used and how “suspicious activity” is defined, law-abiding gun buyers could end up the subjects of suspicious activity reports (SAR) filed by bankers erring on the side of caution. Those SARs, including subjects’ sensitive personal information, will sit in a government database for an indefinite period. The code is also likely to become a “high-risk merchant” category, meaning gun sellers would end up paying steeper fees for access to the card networks, to compensate banks for the added monitoring burden, payments industry veterans said.
If nothing else, Sorkin has succeeded in further politicizing the payment system and further deputizing financial institutions as unpaid informants for law enforcement. And that, all else equal, is bullish, over the very long term, for bitcoin and perhaps a few of its competitors.
To be clear: I am not claiming that Sorkin’s victory will have any direct or immediate effect on the price of any coin. You will find no “trading signals” in this article. I am talking, rather, of second- and third-order effects.
Read more: In Defense of Crime
A dangerous precedent
Those cheering the ISO’s decision and Sorkin’s crusade should rewatch a classic public service announcement from the 1980s.
A man confronts his son about a box of drug paraphernalia found in the teenager’s closet. “Who taught you how to do this stuff?” asks the father.
“You, alright?” answers the boy. “I learned it by watching you.”
Imagine what the right wing is learning by watching Sorkin.
Following a recent U.S. Supreme Court decision, abortion is now illegal or soon to be in more than a dozen states. Lawmakers in some conservative states have floated measures to penalize those who help residents get out-of-state abortions, including by paying for the procedure or travel expenses. If such laws pass, why shouldn’t those states demand the creation of a special merchant code for abortion clinics (which now presumably fall under 8099, “Health Practitioners, Medical Services – Not Elsewhere Classified”)? After all, it would help the states flag what would now qualify as “suspicious activity” when, for example, a local resident’s card is charged at an out-of-state family-planning center.
From the perspective of the anti-abortion movement, also known as the pro-life movement, such a code would “test the resolve of business leaders and their commitment to American lives.”
“Don’t give them ideas, Marc,” I hear some of my blue-state brethren saying. I’m not. Andrew Ross Sorkin is giving them ideas, by ratcheting up the trend of commandeering financial infrastructure to achieve political goals outside any democratic legislative process.
What’s next? Will the right wing insist on a merchant code for transgender care clinics (which, in their minds, are practicing child abuse)? Will the left counter with an MCC for books expressing “hate speech,” the better to detect the “extremists” who purchase them?
None of this would be good for the country or for its banking system. But it’d be great for crypto!
Bitcoin has no merchant category codes. A transaction is a transaction. As long as you control the private keys to a wallet, the network will follow your instructions to process the payment, no matter if the recipient is a narcoterrorist or a nun.
Of course, the Bitcoin network in its raw form isn’t private. Those who want to cover their tracks on the open ledger have to take extra precautions – or use privacy coins like XMR, which boast stronger cryptographic protections but are harder to buy or sell for cash than BTC. Cryptocurrencies remain a clunky but serviceable solution for the desperate.
So don’t count on a spate of gun shops suddenly accepting crypto payments. Don’t expect slumping coin prices to roar back as a result of Sorkin’s achievement. I won’t bother looking up what the BTC price did in the days since the ISO caved to the pressure. Trying to draw a straight line between the two would be dumb.
But directionally, Sorkin has highlighted cryptocurrency’s fundamental value proposition: its cash-like neutrality. For that, crypto holders owe him their gratitude.