Regulation is No Threat to the Ethos of Crypto
Oliver Gale, Founder and CEO of Panther Protocol
The core values behind crypto are decentralization, democratization, and transparency. While traditional finance has been subject to political whims and private manipulation, crypto removes the middlemen and allows users to own and control their data and funds no matter their personal backgrounds. The driving ethos behind crypto is to level the playing field and grant greater individual freedom and sovereignty.
Despite this agreeable ethos, in many mainstream conversations crypto is often viewed as an enabler of money laundering and other illicit activities. In large part, this perception can be traced back to Silk Road, an online black market that existed from 2011 to 2013 and allowed people to anonymously engage in illegal transactions via cryptocurrency. This association with black market dealings has caused the crypto sector to face increased scrutiny from concerned legislators and regulators, especially when it comes to transaction privacy.
Throughout the past year, crypto has been at the forefront of regulatory conversations, specifically with regard to Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. U.S. Senator Elizabeth Warren made waves earlier this year after announcing she would introduce a new AML bill, which, according to NBC News, would “seek to make it easier to verify the identities of customers and transfers to private crypto wallets by requiring financial institutions to keep detailed records and submit reports to the Treasury Department.”
Although some might view regulation as a threat to crypto’s ethos, this is in fact not the case. Regulation is inevitable, but the loss of privacy is not. Contrary to popular belief, privacy and regulation are not incompatible. In fact, they can actually work together. After years of experiencing compliance crackdowns, the crypto industry has adapted and innovated new ways to appease both the regulators and the crypto users seeking private transactions.
One such example of balancing privacy with compliance exists with zero-knowledge (ZK) proofs, which allows information to be verified without exposing the underlying personal data about the sender. The use cases for this are endless — whether it’s preserving privacy while completing KYC requirements or reporting tax information to the IRS. This technology is especially pertinent to institutions that do not wish to have their trading strategies exposed to competing firms.
Without a doubt, 2022 is a pivotal period in time for governments, companies, experts, and the crypto community to come together to make decisions about how money, identity, and data should be governed moving forward. The status quo of traditional finance is being questioned, and the impacts of upcoming regulatory decisions on digital assets and online privacy will be far-reaching. In order for the full potential of blockchain technology and decentralized finance to be realized, the industry must embrace forthcoming regulation, but early adopters and proponents need not fear the loss of their hard-won right to privacy.
About the author: Oliver is a serial entrepreneur, CBDC pioneer, investor, advisor, and global advocate of distributed ledger technology. He currently serves as Founder and CEO ofPanther Protocol, an end-to-end privacy protocol for digital assets that can be deployed compliantly on any public blockchain. Oliver also serves as Founder and Chairman of Elemental, a web 3.0 credit lending platform focused on democratizing affordable credit for underserved communities. Oliver has been a leading global advocate, championing policy making discussions and thought leadership at central banks, government entities, and organizations including the UN, International Telecommunications Union (ITU), Commonwealth Secretariat, Caribbean Development Bank, MIT, Columbia University, and the IMF. Outside of work, Oliver is also an award-winning international reggae and hip hop artist.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.