Native American Cryptocurrency: A Fight for Independence?

According to the U.S. Constitution’s Art. I, Section 8, the Congress has the “power to coin money” and “regulate the value thereof.” But what about “virtual” money, and what happens when nations within our nation are calculating the valuation?

These are questions that are likely to be answered – in court – at some point in the future, thanks to the adoption of MazaCoin, a cousin of Bitcoin, as the “official currency” by all seven bands of the Native American Lakota Nation. 

According to The Verge, MazaCoin “is a month-old cryptocurrency based on the same proof-of-work algorithm as Bitcoin, the virtual currency that approximates cash on the Internet.” 

Since the rise of Bitcoin in 2009, scores of copycats have been developed. The first wave sought to improve on the basic Bitcoin protocol, while the second wave – which includes the meme-based Dogecoin and the Icelandic Auroracoin, are geared to specific groups.

But MazaCoin was developed by an anonymous cryptographer who had constructed a new implementation of the Bitcoin protocol and was looking for a good cause with which to associate it, according to Native American activist Payu Harris, who was recently at The Bitcoin Center in New York City’s financial district attempting to generate interest in MazaCoin. He says he has since fielded inquiries from other tribes about the Lakota cryptocurrency.

Cryptocurrencies tend to knit communities closer together, which is likely one reason why Native American tribes are interested in it. Tribes that use MazaCoin, for example, make it automatically easier to spend money at the local reservation general store rather than changing it into dollars to use at a nearby Walmart. But more than anything, it gives tribes a sense of unity and independence.

“Our tribe has an idea of what sovereignty is, but not at a level like the Ukrainians,” Harris says, referring to the fierce battle for democracy taking place there. “There is no sense of national identity.”

Such fragmentation is largely responsible for the tribes’ self-limiting and “crippling” dependency on the U.S. government. Half of the tribal members on Harris’ reservation, the Oglala Lakota Pine Ridge Indian Reservation in South Dakota, are mired in hand-to-mouth poverty. And a similar situation exists for tribes all across the country; Native Americans “ghettoized” on reservations have grown far too dependent on federal welfare.

Some tribes are trying to change that culture of dependence, and MazaCoin is a tool in that process. 

Harris says about $220 million flows through his reservation annually, via the Prairie Wind casino and other venues. But he guesses that $45 million of that remains with the local economy. MazaCoin is designed, in part, to stop that money from flowing back to Rapid City and out of the state.

“We’re building a new economic foundation for the reservation,” he said.

The Treasury Department has given its blessing to Bitcoin but has nonetheless imposed certain bookkeeping requirements related to money transmission. Meanwhile, some politicians in Washington, D.C., want to ban cryptocurrency altogether (though it is less certain such a ban would apply to Native American tribes whose reservations are largely independent “nations” within the nation). And, existing federal laws that provide special legal status to Native Americans make a good argument for a currency that is totally independent of the U.S. dollar. 

But Native American sovereignty is legally defined by a patchwork of treaties, laws and precedent, so it’s not altogether clear – yet – how any cryptocurrency regulations or an eventual ban would play out in court.

“We’re on sovereign soil so we have the right to have Bitcoin, Litecoin, MazaCoin,” Harris said.

Nevertheless, Chase Iron Eyes, the South Dakota legal counsel for the Lakota, thinks Uncle Sam the federal government will push back if MazaCoin succeeds. 

“There hasn’t been a tribal nation that has declared its own currency and has mandated that that currency is used within its borders,” Iron Eyes said. “But it’s because of this pervasive, ever-present asserted dominion of the United States. They’ll try to shut us down, try to cite us with law violations.”

He also says there is some reluctance among tribal members to embrace the cryptocurrency and let go of the U.S. dollar – and the federal benefits associated with it. But Iron Eyes thinks the time is right to move on.

“We’ve gone through 100 years of imposed poverty. That’s the fight we’re having,” he says. “What we’re trying to do with MazaCoin is just spark something to get us out of this cycle of victimhood.”