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Financial Surveillance and a Crypto Society Meet at SXSW

Filecoin at SXSW

Blockchain technology and cryptocurrency were on full display at the recent SXSW festival in Austin, Texas. For the Filecoin Foundation-sponsored track last Tuesday, privacy was a key topic and included a panel discussion titled, “Financial Surveillance in a Cashless Society.”

AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements are ever-growing in the cryptocurrency space especially as the new distributed ledger technology and traditional finance worlds continue to merge. So, where does privacy fit in? A standing-room only audience wanted to know.

Marta Belcher, general counsel of Protocol Labs and chair of Filecoin Foundation, offered some initial thoughts in a crypto context: “There is this myth that privacy is bad and that tools that enable privacy and anonymity are illegal or enable illegal activity. And I think that is fundamentally a very important misunderstanding. Privacy is absolutely critical to civil liberties, as is the ability to transact anonymously.” She pointed to the importance of anonymity as it related to participants in the the Hong Kong protests of 2019-2020 and their anonymous purchase of subway tickets to get to the gatherings.

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EU’s Vestager Hails NFTs as a New Way To Value and Compensate

Vestager at SXSW 2022

In an hour-long interview at South by Southwest in Austin, Texas,  Margrethe Vestager, Executive Vice President of the European Commission, offered the European regulator view on technology in the 21st century.

Though her purview does not necessarily cover cryptocurrency as CNBC interviewer Sara Eisen pointed out, Vestager did chime in on blockchain and non-fungible tokens (NFTs), specifically.

She signaled hopeful curiosity:

“The NFT is a new thing. I find it really interesting because, first of all, it questions everything you know about value. And second, maybe it’s a new way for artists and musicians and to get a stronger bite of the value that they create? And that obviously is really interesting. So we follow [it], but it takes us a bit of time because we start to recruit new people [at the European Commission] – not every lawyer is a gamer (jokingly). We need to get more people on board.

I had a very interesting experience because I had at a group of three people advising me during the last mandate when we were preparing the Digital Markets Act. It was a lawyer, an economist and a technologist. To see the three of them working together was really interesting because it took them some time to get used to it. But then once they did, what they achieved was really interesting.”

On tech regulation momentum coming from Washington DC

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What Does An Executive Order on Digital Assets Look Like? Now We Know

State of the Union 2022

In today’s executive order delivered from the White House, U.S. President Joseph Biden revealed his government’s near-term plans for harnessing the world of cryptocurrency with its estimable culture of innovation and increasing need for a regulatory framework within the United States.

Though protecting the consumer and business remains front and center, the United States appears to be obliquely embracing the idea that in order to remain the leader of the free world, it must keep pace with technology – and the blockchain industry, specifically.

Biden’s order begins:

“By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1.  Policy.  Advances in digital and distributed ledger technology for financial services have led to dramatic growth in markets for digital assets, with profound implications for the protection of consumers, investors, and businesses, including data privacy and security…”

Read the full order on the White House website here.

In a coordinated effort, other members of Biden’s cabinet chimed in shortly after release of the order including Secretary of State Antony Blinken who identified one of the blockchain industry’s key talking points – that the United States is in jeopardy of falling behind as the World’s leader in innovation.

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Mastercard Pitches Scale and Acceleration to Crypto Startups at ETH Denver 2022

Mastercard

Mastercard was in recruitment mode for its Start Path group at ETH Denver last week with a pitch to attendees and their hot crypto companies. Partnership and building were the key themes by company representative Grace Berkery who is Program Manager, Fintech & Enablers – Digital Assets & Cryptocurrencies,

Mastercard announced its inaugural startup accelerator program in July and Berkery highlighted to the audience the vast resources of the traditional fintech company – and its $350 billion market cap – as well as its commitment to the blockchain and crypto space.

Recent blockchain-related announcements for Mastercard include:

    • In December, the company inked a deal with MetaMask developer ConsenSys to create a rollup offering on Ethereum mainnet for improved scalability. (see release).
    • During its January earnings conference call, the company said it was partnering with Coinbase to help facilitate the purchase of NFTs by consumers.
    • This month, Mastercard said it is expanding its digital consulting business, too (see release).

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Decentralization and Privacy Can Co-Exist on the Blockchain Says Privy CEO Stern

Henri Stern of Privy

With data flooding today’s blockchain infrastructure, speed and scalability have become an increasing bottleneck. Nevertheless, user privacy is a part of this equation and in the notoriously transparent world of blockchain, what’s a developer to do?

At ETH Denver 2022, Privy CEO Henri Stern – formerly of Filecoin – showed his hand on where his company will fit in as it looks to help blockchain developers thread the needle and maintain user privacy while continuing to offer improved decentralization and better user ownership.

For Privy, its API offering starts with effective management of user data off-chain by addressing compliance and infrastructure requirements. The company hopes that easy access to its API will somewhat relieve developer concern about the thorny thicket of user privacy and let them concentrate on their blockchain product and on chain mechanics.

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Blockchain Association Sees Challenges and Opportunity Ahead For Crypto at ETH Denver 2022

Kristin Smith of the Blockchain Association

Momentum in the blockchain and cryptocurrency industry was on full display as ETH Denver 2022 pulsed in the Mile High city last week. Among the Saturday slate’s many presentations, Blockchain Association executive director Kristin Smith explained the state of the industry from her perch as she helps manage industry connections to DC policymakers.  

To begin, in addition to her work around DC-focused industry communications, Smith sketched out the Association’s org chart which includes key members such as Jake Chervinsky, the organization’s head of policy in DC, and a lobbying team which interacts directly with government policymakers across regulatory and legislative functions. 

As for challenges the blockchain industry is encountering today, there are many according to Smith. She identified several recent developments while remaining sanguine about the industry’s prospects overall saying, ”As an industry and ecosystem we are in a really strong place in Washington and our political power is only growing. If we continue to work together in a coordinated way, I think the policies are going to work out just fine.”

A selection of the recent developments…

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NIST Digs In on Differential Privacy Definition at US Department of Commerce

NIST on Differential Privacy

In their 14th blog post on all aspects of differential privacy, researchers Joseph Near and David Darais offer another detailed post explaining the future work and current open challenges with the de-identification technology.

Near and Darais are moderators for the Privacy Engineering Collaboration Space with National Institute of Standards and Technology (NIST), a part of the US Department of Commerce.

According to the website, the Differential Privacy blog series is “designed to help business process owners and privacy program personnel understand basic concepts about differential privacy and applicable use cases and to help privacy engineers and IT professionals implement the tools.”

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Banque de France on the Central Bank CBDC and Privacy

Banque de France CBDC

Today’s presentation to the Blockchain NYC Meetup group reviewed the Banque de France‘s recent research on a Euro approach to a central bank digital currency (CBDC). Though still a couple of years away – at best – according to the Banque’s representatives, the central bank’s many moving parts offer opportunity with distributed ledger technology (DLT) and blockchain.

Where CBDC product development mixes with privacy was a topic in the Q&A section of the presentation.

Light editing for clarity…

Jamiel Sheikh, Blockchain NYC meetup moderator

[A question from a professor], and this may be applicable to retail CBDC, how will Bank of France design of CBDC affect consumer privacy? How [do you] address the trade off between protecting consumer privacy and mitigating risks to financial integrity?

Adeline Bachellerie, Head of Digital Currency and Innovation, Banque de France

Your quick question if I understand right is about retail CBDC here. So yes, as you know, we are working within Euro system on the Investigation Phase for [muffled, perhaps “exterior”] which could be Central Bank digital money for retail purposes. So, we do that work in this investigation phase on CBDC for wholesale purposes.

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