The G20 Summit has shown support for a new set of regulatory tactics that would require associations overseeing cryptocurrency exchanges to hand over user data.
Cryptocurrency Must Be Regulated, but At What Cost?
The idea is to prevent money laundering and other illicit activity surrounding cryptocurrency. As of late, the idea of mixing both legally and illegally-obtained cryptocurrencies together is both a real and valid fear, considering companies like Bestmixer.io were shut down for performing such activities. Regulators overseeing the operations of cryptocurrency exchanges would be required to hand over all user data to local legislators, particularly when transactions appear suspicious.
This is both a positive and a negative maneuver. On one hand, we cannot deny that the crypto scene is plagued with cybercrime. From phony initial coin offerings (ICOs) to SIM-swapping tactics to malware and ransomware, cryptocurrency does seem to attract its fair share of illicit and malicious activity.
And yet, the steps being suggested are a bit extreme. For one thing, it’s a complete invasion of a person’s privacy. Granted that person is doing nothing wrong, yet one transaction looks different than those in a previous series of transactions, the user’s data is likely to be handed over to lawmakers without hesitation, and that person’s privacy will be violated.
While it’s understandable that crypto regulators seek to put an end to cybercrime, is offering up one’s private data without notice or permission the right maneuver? Cryptocurrencies are designed to be somewhat anonymous, and while this cannot always be accomplished, the retrieval of a customer’s information and sharing it with third parties is more of a centralized move than decentralized. This goes against the very notions and ideals of cryptocurrency and places the digital asset industry in serious question.
Nevertheless, the G20 Summit believes this is the best route to take. Now that members have shown their support, it won’t be implausible to assume that various member countries will enforce these rules in the coming years.
The Summit issued a statement, explaining:
Technological innovations can deliver significant benefits to the financial system and the broader economy. While crypto assets do not pose a threat to global financial stability at this point, we are closely monitoring developments and remain vigilant to existing and emerging risks.
Don’t Do Anything Crazy
The good news is that the current regulatory draft, as it stands, would only require the transmission of one’s private data when a transaction appears suspicious. Thus, granted customers remain clean and don’t do anything to raise eyebrows, they’ll likely be untouched, and their information will be kept safe.
In the meantime, a group of financial regulators have signed what’s known as a Memorandum of Understanding (MOU) to potentially develop further regulations and policies to govern digital assets and their uses.