Cryptocurrencies, Financial Privacy and the Regulators
During Bitcoin Wednesday on 1 July, 2020 University College London’s Geoff Goodell will talk with us about financial privacy and the future of payments and electronic value exchange. At one extreme, the use of privacy enhancing technologies combined with cryptocurrencies could pave the way to a world of impenetrable lawlessness. At the other, the regulations implemented by institutions amount to total surveillance and the increasing risk of misuse of our personal information.
Geoff will tell us about a range of alternatives between these two extremes and consider some of the potential compromise approaches that might offer both the auditability required by regulators and the anonmity needed by users. He will talk about the tradeoffs of these choices, and will also cover the key reasons why cryptocurrencies often fall short of providing anonymous, cash-like electronic transfers. Geoff describes the search for digital alternatives to cash in terms of the pursuit of privacy in a world in which the revenue for infrastructure to support cash is falling below its fixed costs. Significant expense results from the requirements of tax monitoring, anti-money laundering practices and human rights related to private payments.
I see two approaches that offer alternatives to both surveillance-oriented modern retail banking and direct public engagement with cryptocurrency networks that may operate beyond the reach of public accountability. Our first approach, an institutionally supported privacy-enabling cryptocurrency, may make it more attractive for regulated institutions to interact with privacy-enabling cryptocurrencies, by creating a structure for legal interpretations of their use. Our second alternative, an institutionally mediated private value exhange, establishes a method by which regulated institutions can conduct financial transactions on a distributed ledger that shares essential characteristics with privacy-enabling cryptocurrencies.
Both alternatives may be useful in different contexts. Geoff believes that acknowledgement and discussion of the pros and cons and serious commitment to both privacy and regulations are needed for advancing the interests of all stakeholders.
Dr. Goodell’s research draws on industry knowledge to make policy and systems recommendations to future-proof society and the economy specifically related to digital marketplaces, digital payment systems and regulation. In addition to his role as Senior Research Associate within UCL’s Department of Computer Science, he is convenor of the ISO working group on Foundations of Blockchain and Distributed Ledger Technologies and an academic advisor of the Belgium-based International Association of Trusted Blockchain Applications. He is also a contributing member of the Whitechapel Think Tank and All-Party Parliamentary Groups, where he builds relationships between business, academia and government.
Before coming to UCL, Geoff worked for more than a decade as a portfolio manager and strategist in the financial industry. He worked as Chief Investment Officer at a boutique asset management company in Boston, where he was responsible for systematic macro trading and statistical arbitrage. Before that, he worked in the corporate credit and structured products groups at Goldman Sachs in New York. He is a CFA charter holder. He earned a PhD in computer science from Harvard University and an undergraduate degree in mathematics from MIT.
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