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30 September 2020

Privacy laws might prove to be a blessing in disguise for crypto

Privacy laws might prove to be a blessing in disguise for crypto

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An introduction that has brought with it yet another promise is that of private transactions on a blockchain.

Nonetheless, some crypto users still consider their transactions untraceable and their actions on the chain private. .

Cryptocurrency users weren’t the only people with privacy and data protection on their minds.

With more or less the same incentives — protecting people’s privacy in an increasingly digital world — policymakers around the globe had started working on data protection regulations.

The reason the ECJ gave was that ongoing surveillance practices by the American government weren’t compatible with EU data protection regulations. .

Another reason why privacy isn’t necessarily compatible with hash-based, indelible infrastructures is that data protection isn’t technology agnostic.

The GDPR is quite specific that the rights of EU “data subjects” — which is legalese for people who can be identified by this information — follow the data, meaning that no matter where this data ends up, it must be protected with the same high standard as it would be in Europe. .

It’s, therefore, relatively easy to foresee that, once more accustomed to crypto regulations in general, the EU would have a problem with specific aspects of transferring crypto assets, especially as they end up including more data than previously acknowledged — and even more so when “inadequate” countries are directly involved with the transfers. .

For example, with Facebook’s heavy involvement in the Libra Association, some data protection actions from EU institutions seem almost inevitable, especially as European data authorities show consistency in making any EU–U.S.

The other scenario revolves around any state-level adoption of rules about crypto transfers and mandatory collection of specific data

With the proposed and somewhat inevitable wider adoption of digital currencies, it is quite likely that more and more transaction data will be generated and easily accessible worldwide

In this scenario, the problem wouldn’t be the breach of any specific data protection regulation and particularly the GDPR

The usual sentiment among crypto users might be that regulators’ excessive interference with technology and innovation has a profound negative effect, especially to the broader adoption of digital currencies

Privacy regulations might prove to be the no man’s land where regulators and blockchain and crypto users can achieve a mutual understanding because they have a common enemy — governments with extensive surveillance practices. 

Regulators and blockchain and crypto users also have a common goal: to ensure that both cryptocurrencies and the technologies underlying them are used in a way that’s not deceptive in its promise

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