Denelle Dixon of Stellar Lumens (XLM) pointed to how they submitted a comment letter on behalf of SDF to the Financial Crimes Enforcement Network in response to their Notice of the Proposed Rulemaking on “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets” – or NPRM, for short.
Several organizations have joined together giving their concern about the far-reaching consequences of this proposal which is set to influence the blockchain and cryptocurrency ecosystem.
SDF have formally shared their deep concerns about the impact of this rule if it gets implemented.
SDF response letter points to how NPRM’s discussion of the digital asset wallets reveal a very deep misunderstanding about the blockchain architecture, which can very well be rectified with a public-private dialogue that is closer.
The NPRM have overlooked the many benefits offered by self-hosted wallets in terms of the growth of the digital economy and also financial inclusion. SDF stated that the NPRM will hinder the U.S. global competitiveness, further discouraging domestic innovation and incentivize offshoring of a critical technology.
NPRM Complicating Per Stellar Lumens
There is also a high risk of the NPRM actually complicating and frustrating the law enforcement investigations which involves the convertible virtual currency as opposed to helping them.
Newer cybersecurity and privacy risks are set to happen for the public with this rule than any kind of law enforcement benefit.
Denelle Dixon emphasized to the regulators at FinCEN from their letter that New technology deserves new approaches to regulation.
The current proposal from FinCEN is apt for a regulatory framework for a centralized, intermediary-based financial system, but not for decentralized blockchain. Further stated, “Foisting antiquated rules onto entirely new paradigms doesn’t work – and it won’t work here.”
Denelle also stated that it is important for FinCEN to give time to the industry to share information about what makes this technology unique. By bringing together the industry it will be possible to know what makes this technology unique and on how it can be used to combat illicit activity.
FINCEN will be able to learn more from the decentralized ecosystem and the decentralized ecosystem will learn more from regulators only by sitting together in a discussion. This is the only way to make future regulation represent new thinking without falling back on legacy systems in order to truly maximize the net benefits of regulations in this cutting-edge field of blockchain technology.