Before European settlers explored America, it is approximated that 18 million indigenous people called North America their home. Decades of war, disease, discrimination, removal, and termination rapidly brought those numbers to only 5.2 million today. Today, there are about 574 federally recognized and 63 state recognized Native American tribes in the United States. After losing an abundance of land and forceful relocation to reservations, modern Native Americans fight for sovereignty and cultural and economic survival. Today, 1 in 3 Native Americans are living in poverty, with a median income of $23,000 a year.
In 2009, a new kind of economic technology emerged—crypto currency. A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. In 2009, Bitcoin software and mining was the first digital currency made available to the public. As of March 2022, there are over 18,000 crypto currencies in existence throughout the world.
Native American tribal leaders caught wind of the successes of cryptocurrency and joined in on the business of creating, mining, and selling digital currency for two main reasons: (1) to empower Native Americans through a modern declaration of sovereign status and independence and (2) to boost economic activity and general income in Indian Country.
In 2014, the Oglala Lakota Pine Ridge Indian Reservation in South Dakota adopted MazaCoin as the official currency of the seven bands that make up the Lakota Nation. The Lakota Nation reports that roughly $220 million flows through the reservation every year, through the Prairie Wind Casino and other venues, but less than $45 million of that stays in the local economy. With MazaCoin, the Nation hopes to stop that money from flowing out of the state.
In 2019, NativeCoin (N8V) emerged. Its goal to provide Native American Tribes with an all-in-one, digital currency to be used throughout Indian Country, attracting business commerce from outside of Tribal lands to the Native Sovereign lands through online gaming, sports betting, and point of sale transactions at shopping malls, hotels, casinos and other Native Businesses. Other digital currencies made especially for Native American tribes, such as One Nation Coin, are up and coming with long term goals to bring a new economic foundation of blockchain technology to Native American people and governments.
However, a real concern amongst tribal leaders and Native American activists is whether federal law and regulation will curb tribal currency efforts before real-world economic benefits are realized for Native peoples.
Crypto currency has been difficult to make a legal status case for itself largely due to its decentralization. Although cryptocurrency regulations on exchanges state that digital currencies are legal and the decentralized nature of the currency is attractive, the legal status of cryptocurrencies has implications for their use in daily transactions and trading.
The US places virtual currency exchanges in the same regulatory category as traditional AML/CFT gatekeepers, financial institutions, and money transmitters: accordingly, it applies the same regulations, including those set out in the 2021 amendments to the Bank Secrecy Act. In practice, this means that cryptocurrency exchange service providers must obtain the requisite license from the Financial Crimes Enforcement Network (FINCEN), implement an anti-money laundering (AML), combating the financing of terrorism (CFT), and Sanctions programs, maintain appropriate records, and submit reports to the authorities. Meanwhile, the US Securities and Exchange Commission (SEC) has indicated that it considers cryptocurrency regulations to be securities and applies securities laws to digital wallets comprehensively in an approach that will affect both exchanges and investors alike.
By contrast, the Commodities Futures Trading Commission (CFTC) has adopted a friendlier, “do no harm” approach, recognizing crypto currencies such as Bitcoin and Ethereum as commodities and allowing other virtual and cryptocurrency derivatives to trade publicly on exchanges that it regulates or supervises. In response to guidelines published by FATF in June 2019, FinCEN has also made clear that it expects crypto exchanges to comply with record-keeping requirements and the “Travel Rule” by sharing information about the originators and beneficiaries of cryptocurrency transactions. At the same time, some politicians are calling for a ban on the currency and legal counsel for various Native American tribes are already anticipating push back if crypto currencies continue to succeed.
Tribal advocates like Payu Harris, creator of the Lakota Nation’s MazaCoin, are optimistic that federal law and regulations will not interrupt the continued use of the tribe’s new currency. Harris states that federal laws granting Native Americans special legal status will provide an argument independent of the US dollar. However, others are suspect.
Native American tribes are deemed “wards of the federal government,” and while tribes possess the right to form their own governments, make and enforce laws, tax, establish and determine tribal citizenship, and license and regulate activities within their jurisdiction, among other rights, tribal sovereignty is limited by a patchwork of treaties, laws, and precedent. The US Bureau of Indian Affairs notes, “[l]imitations on inherent tribal powers of self-government are few, but do include the same limitations applicable to states, e.g., …. print and issue currency.” Additionally, the Commerce Clause (ArtI.S8.C3.1), Coinage Power Clause (ArtI.S8.C5.1) and State Limitation Clauses (ArtI.S10.C1.2.1) the US Constitution, and a complex and disheartening Federal Indian Law precedent pose as barriers to the creation and sustaining of present and future tribal crypto currencies.
Other barriers also stand in the way including access to smartphones and internet by tribal citizens, and the fear of letting go of the US dollar, which holds the implicit threat of letting go of the federal subsidies denominating in it.
But the fight continues. Tribal currency advocates point to more than “100 years of imposed poverty” and are committed to advocate for sovereign tribal digital currencies to “spark something to get [Native Americans] out of this cycle of victimhood.”
* Cheyenne Rivera is an Associate Editor on the Michigan Technology Law Review