How to establish harmonization among regulatory requirements and technology development: AML/KYC, privacy enhancement of key management
After the original invention of Bitcoin in 2008, a huge amount of technology and business developments have been conducted on crypto assets and blockchain technology. One of the essential points of debates is privacy protection versus anti-money laundering (AML). In late 2020, FinCEN published a draft of revised regulation on Virtual AssetService Provider (VASP) and unhosted wallet. This year, FATF proposed revised guidance, which may affect VASP and broader blockchain applications like DeFi and Non-Fungible Token. Though integrating privacy-enhancing technology to Blockchain is essential to protect citizens' rights, we need to find a good balance of privacy protection and AML to achieve individual goals and social goals. At Blockchain Governance Initiative Network (BGIN), multi-stakeholders, including engineers, businesses, regulators, and academia, drafted a common document to understand the problems and potential solutions. In this talk, I will review the discussion at BGIN, how multi-stakeholder discussions help to create a common document. I also provide a summary of discussions at FATF Virtual Assets Contact Group (VACG) and the Private Sector Consultative Forum.