The language included in the European Union's comprehensive crypto regulation, known as MiCA, is highly restrictive and could limit the growth and innovation of the blockchain industry. In particular, Article 68 poses a threat to the privacy and security of individuals, businesses, communities and nations.
According to MiCA Article 68, the rules for operating a trading platform for crypto assets must prevent the trading of crypto assets with built-in anonymization unless the holders of the assets and their transaction history can be identified by authorized crypto-asset service providers.
Gary Weinstein is the head of global regulatory relations at Electric Coin Company.
This language could have a detrimental impact on the growth and innovation of the blockchain industry, as well as the privacy and security of individuals, businesses and communities.
It is important for regulators to understand that the blockchain industry is still in its early stages of development and that a one-size-fits-all regulatory approach may not be the best solution. Instead, a more flexible and dynamic approach is needed that allows for the continued growth and innovation of the blockchain industry while still ensuring compliance with regulatory requirements and protecting the privacy and security of all stakeholders.
To address this issue, we might consider alternative options to allow crypto-asset service providers (CASPs) to continue facilitating confidential transactions while still ensuring compliance with regulatory requirements. Rather than suggesting a specific technical solution, regulators should allow for regulated intermediaries to have the flexibility to consider their own risk-based solutions that balance the need for compliance with the need for innovation and privacy.
Additionally, together with EU regulators, we might consider the development of regulatory technical standards to provide more guidance on the implementation of MiCA Article 68.
Finding a solution to the challenges presented by MiCA Article 68 will require coordination and collaboration. By engaging in open dialogue and gathering input and feedback from industry leaders and experts, EU regulators can gain a better understanding of the potential implications of the regulation on the blockchain industry and the privacy and security of individuals, businesses and communities.
See also: Why Crypto Should Support the American Data Privacy and Protection Act | Opinion
Privacy is a cornerstone of human rights. It allows us to communicate freely and securely, without fear of surveillance or retaliation. And, without private encrypted transactions, our financial transactions are exposed to hackers. When individuals are able to conduct transactions confidentially, malicious actors are thwarted from tracking and targeting them. Also, businesses can conduct confidential transactions and protect sensitive information from competitors and malicious actors.
By considering alternative compliance options, developing regulatory technical standards and engaging with industry experts and stakeholders, we can work towards implementing MiCA Article 68 in a way that promotes growth and innovation in the blockchain industry while protecting the privacy and security of all stakeholders.