The unique power of blockchain and cryptocurrency can also be considered their weakness. Crypto users gain unparalleled privacy for financial transactions through a decentralized transactional system. Governments, however, demand transparency in financial transactions for legal concerns. This creates a paradox. People are less inclined to use financial instruments if, in doing so, they expose their money to the world. Conversely, there are a number of regulations requiring financial institutions to counteract terrorism and money laundering — serious concerns for many governments. The crux of the issue is that most public blockchains require a consensus of all participants to validate transactions. …
The latest news has left the decentralized finance community in a collective fetal position. Responding to the threat of increased regulatory oversight, leading decentralized exchange Uniswap recently restricted the trading of certain tokens. Earlier in July, Dan M. Berkovitz, chairman of the Commodity Futures Trading Commission (CFTC), said that DeFi derivatives platforms might contravene the Commodity Exchange Act (CEA): “Not only do I think that unlicensed DeFi markets for derivative instruments are a bad idea, but I also do not see how they are legal under the CEA.” Most worrisome of all is the initial version of the United States …
Smart contracts are an important element of the blockchain revolution, although they predate blockchain. According to most sources, it was Nick Szabo who coined the term “smart contract” in the 1990s. The mechanism of a vending machine has since been frequently given as an example of a basic smart contract based on if-then logic. The payment into a vending machine triggers an irrevocable automated action from when money is retained to when an item is supplied. The emergence of blockchain technology enabled the implementation of such if-then logic on decentralized networks to facilitate autonomous self-executing, self-performing smart contracts, also called …
Regulations are not going anywhere. On the contrary, financial service providers face more regulatory challenges and higher costs than ever before. During the early days of cryptocurrencies, a “Wild West” culture emerged when regulators, uncertain on how to tackle this thing called blockchain, paid little attention to the thefts, scams and hacks plaguing the virtual-asset market. Today, this is no longer the case. No matter their roots, every virtual asset project from Telegram to Shapeshift to Libra is ramping up compliance while regulators continue to issue guidance, enforce regulations and pay closer attention to digital securities platforms, crypto exchanges and …
For better or for worse, the cryptocurrency space is coming of age. Since Bitcoin’s rise to mainstream prominence in 2015, there has been increasing recognition of digital assets from government agencies around the world. In turn, new regulations are being imposed to control the way cryptocurrency companies operate and do business globally. Most recently, the Financial Action Task Force issued new guidelines on how digital assets should be regulated. In order to raise awareness around these requirements, the blockchain security company CipherTrace hosted a conference and hackathon this week in San Francisco dedicated entirely to discussions on the FATF guidelines, …