Crypto: Crypto’s Next Battle Is Privacy, But Regulators Face Chicken-egg...
Institutional adoption of cryptocurrencies is accelerating, as more banks and payments companies test blockchain for settlements, but the technology itself exposes transaction data to the public.
“What people are not comfortable with is having their transactions broadcast to the entire world,” Yaya Fanusie, head of global policy at Aleo Network and a former Central Intelligence Agency (CIA) economic and counterterrorism analyst, told Cointelegraph.
Fanusie said that this framing mirrors the existing financial system, where transactions are not anonymous but are also not exposed to constant online scrutiny. That becomes harder to maintain on public blockchains, where transparency is built into the architecture.
Related: Crypto’s decentralization promise breaks at interoperability
Banks, payments companies and corporations may see efficiency and programmability benefits in blockchain systems, but few are willing to conduct routine financial activity on public ledgers where competitors, counterparties or adversaries can infer sensitive business information.
“If all of those actions are public, it creates security risks and confidentiality issues. Institutions have proprietary and sensitive information that cannot be exposed, and they cannot operate at scale if every transaction is visible to everyone,” Fanusie said.
“Regulators are intrigued by these tools and want to see them in action,” Fanusie said. “But it becomes a chicken-and-egg problem because the industry needs regulatory clarity to deploy them.”
Central bank digital currencies (CBDCs) combine state authority with direct access to transaction data. Unlike private sector payment systems or blockchains, governments are at the center of digital money flows.
Europe’s and China’s approaches are often studied as two of the world’s most important economies actively pursuing CBDC developments.
In that sense, CBDCs aren’t just a new payment rail but a test of how much financial data states are willing to collect and retain in the digital age.
Source: CoinTelegraph
