Twitter CEO criticizes new proposal for regulation of cryptocurrencies in the USA

A new proposed regulation for cryptocurrency transactions in USA is worrying Jack Dorsey, CEO of Twitter and Square, a financial services company. In a paper posted on the company’s website, the executive highlights how the new rules can harm the platform – which invested US $ 50 million in Bitcoin recently.  

He emphasized how the regulation would harm Square by citing “unnecessary friction and perverse incentives for cryptocurrency customers”. That’s because, what the new regulation proposes is that cryptocurrency companies should record information regarding virtual currency transactions far beyond what is necessary – in some cases, even personal data about the parties involved in the negotiation.  

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The main purpose of the regulation is to help prevent some of the illegal uses of criptomoedas, such as illicit activities – drug trafficking or money laundering are some examples.

However, Dorsey’s main complaint concerns ordinary customers, as the practice would create the aforementioned “unnecessary friction” between company and user, since it would be necessary to collect the full name and address of some of them for security purposes.  

Regulation may hinder the commercialization of cryptocurrencies in the USA. Photo: Wit Olszewski / Shutterstock

“To be more clear, if the [regulations] were implemented as they are written, Square would be required to collect untrustworthy data about people who did not choose to use our service or registered as customers,” says Dorsey.  

To support his claim, the businessman cited the example of a father who wants to send money to his daughter. Even if the recipient uses a private wallet to receive the bitcoins, Square would be required to collect information from both parties. Dorsey, along with other privacy advocates, see this as an exaggeration, especially due to the open nature of the blockchain

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The CEO argues that regulation can intimidate customers who, to protect themselves, would use “portfolios or services outside the United States to transfer their assets more easily”. Simply put, if people have to provide a bank with private information to conduct a transaction, they will avoid using it.  

In addition, the executive says that this hinders innovation. “The heavy gathering of information and reporting requirements deprives US companies of the chance to compete on equal terms in using cryptocurrencies as tools for economic strengthening,” he says. It remains to be seen whether, after the Dorsey, some points of the regulation will be revised.

Street: The Verge

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