USDC issuer encourages the use of privacy technology! Calls for updating outdated regulations and identifying illicit activities

The privacy protocol Tornado Cash was sanctioned by the U.S. Office of Foreign Assets Control (OFAC) last week, with several on-chain addresses being added to the SDN list. Stablecoin issuer Circle also promptly froze the related assets. However, Dante Disparte, the Chief Strategy Officer, expressed concerns over the sanctions in a statement and proposed several suggestions to uphold privacy in blockchain finance.

Conflicts between Privacy Protection and Financial Compliance

Regarding the recent sanctions event, Dante Disparte, Chief Strategy Officer of Circle, stated that it will exacerbate the tension between open-source protocol, privacy presumption and protection, and financial crime compliance. While it is inevitable for organizations that comply with regulations to adhere to anti-money laundering and sanction requirements and assist in combating the financing of terrorism, sanctioning the protocol itself is a further policy issue.

"In order to prevent the possible emergency halting of combinable and encoded currencies and crypto assets in the future due to long-term compliance and national security issues, we need to take action within the industry to demonstrate that financial innovation, inclusivity, integrity are not trade-offs," said Dante Disparte.

The current issue lies in the fact that although cryptography, open-source protocols, and the development of the crypto economy have driven a new wave of financial innovation, it is undeniable that these tools and software are also being exploited by malicious actors.

Therefore, in order to avoid overregulation while staying compliant, and to safeguard user privacy needs, Circle has put forth several policy development suggestions:

1. Modify the 52-year-old Bank Secrecy Act to identify the key distinctions between identification protocols, software, and non-patent open-source technologies in the modern environment, as well as the actions, methods, and behaviors of bad actors.
2. Continuously develop and support market integrity and financial crime compliance tools, technologies, and standards for the entire industry, while maintaining blockchain-based financial open-source and universal usability.
3. Encourage the use and development of privacy protection technologies, as well as enhance financial regulations and protection measures, and promote the lawful use of crypto assets and open-source blockchains.
4. Use the protection and compliance of open-source software under financial regulation as a tool to promote competition, interoperability, and uphold democratic values, while making progress in financial integrity.
5. Develop, disseminate, and compliantly use decentralized identity, verification, financial integrity standards, protocols, and tools for privacy protection.

In addition to the above suggestions, Dante Disparte also stated that Circle will formulate long-term policies to help promote and educate the public to support privacy in blockchain finance.