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Investor trust in cryptocurrencies has progressively grown over time. Clearly, the crypto community is becoming larger by the day. Nonetheless, since its beginning, a lack of regulatory certainty has plagued and hampered this nascent sector.
Speaking at a virtual event hosted by Axious, Democratic Representative Bill Foster opined that courts should be allowed to unmask crypto users and reverse fraudulent transactions. With respect to the “poorly understood” and “minimally regulated industry,” Foster claimed,
“I sometimes feel kind of lonely here… Very few understand the nuts and bolts of it [the industry].”
The Congressman is also a member of the Financial Services Committee and co-chairs the Blockchain Caucus. Expounding on the necessity for authorities to keep an eye on things, the Congressman proposed something that has the potential to taint the fundamental nature of bitcoin and crypto-related activities. He stated,
“You (authorities) have to be able to go to court to unmask participants under some circumstances. It doesn’t have to be visible to the whole world.”
Foster advocated for a new type of pseudo-anonymity, claiming that a third party, such as a court, might discover about a crypto user’s real-world identify by utilising a “very heavily guarded key.” According to him, this would function as a “cryptographic backdoor in essence,” allowing them to reverse transactions on the blockchain.
Foster claimed that such technologies were needed for the government to safeguard itself, companies, and individuals against ransomware assaults. He claimed,
“… But in fact, there’s not a technological alternative that I’m aware of. For most people if they’re going to have a big part of their net worth tied up in crypto assets, they’re going to want to have that security blanket of a trusted third party that can solve the problem.”
With respect to regulations, the Congressman opined,
“We’re going to have to establish a law between the legal and illegal regimes here. There’s a significant sentiment, increasing sentiment, in Congress that if you’re participating in an anonymous crypto transaction that you’re a de-facto participant in a criminal conspiracy.”
Foster concluded by asserting that the middle-ground worth striving for, at this stage, is third-party anonymity.