With the help of Derek Robertson
One issue raised by the ongoing cryptocurrency crackdown it is how much influence US regulators can have on public blockchain networks.
The answer partly depends on how they do it. They have several options, but each presents their own dilemmas.
One way they could take advantage of this would be to take a hands-off approach and bring in as much crypto activity as possible in the US. Once most of the blockchain industry and infrastructure is established in the US, they can gradually introduce new rules and hope that these rules will effectively govern blockchain activity, even if many of these networks exist outside of the US.
One of the problems with the slow approach is that at the same time you have the financial Wild West in your backyard and no one is playing sheriff.
So, another approach is to lower the hammer. This allows regulators to do their job—regulate—and actively advocate for their own interpretation of the rules.
The problem is that blockchain networks are inherently difficult to rein in: they are global, originally built to thwart outside regulation, and are still evolving rapidly.
It is relatively easy for network members to find workarounds, and these workarounds may be counter to the long-term goals of regulators.
Of course, a globally coordinated response could be more efficient, but it’s not clear if this is achievable.
In the absence of this, it is worth considering several recent indicators that illustrate the challenges that US authorities face in the fight against blockchain networks.
According to CoinMarketCap data, the supply of Tether stablecoin has increased by about the same amount over the past 10 days.
Last Monday, stablecoin issuer Paxos stopped issuing new units of BUSD, its Binance-branded stablecoin, after the New York City Department of Financial Services ordered it to do so. The company also received notice from the Securities and Exchange Commission that the agency is considering taking action against the company based on the theory that the token is an unregistered security.
The news made stablecoin users flock to Tether, expanding its dominance in the global stablecoin market.
Paxos is headquartered in New York and the company touts its compliance-focused, “regulatory-preemptive approach” to crypto as perhaps the main selling point, even though the authorities were apparently not sold.
Tether’s owner, iFinex, is based in Hong Kong.
Last summer, when the Treasury Department imposed sanctions on the anonymization tool Tornado Cash, Tether opposed it, indicating that it would not go so far like his American counterparts in collaboration with measures.
In crypto, where defiance of governments was the starting point, the fact that Tether is less amenable to the rules of US regulators is part of its appeal to many users.
Plus (pun intended) it’s not as popular with US regulators, who fined its owner $41 million in 2021 to settle allegations that he misled investors about backing his assets.
Thus, the Tether boom looks like an unintended consequence of the suppression of the domestic stablecoin, even if it could have been quite foreseen.
As one adviser to a US stablecoin issuer told me, “I think the easiest way to explain it is: aha.”
As of noon today, this is part of the new Ethereum transaction blocks added in the last 24 hours that are in line with Treasury Department sanctions. Date from Labrys, an Australian blockchain developer who opposes compliance practices. This represents a sharp drop during the winter.
Last fall, things took a different turn.
In October, we have taken note For the first time, most of the new blocks added to the Ethereum chain came from block creation services that comply with the sanctions of the Ministry of Finance, excluding prohibited addresses.
Passing that 50 percent threshold was a notable—albeit largely symbolic—victory for US regulators seeking to impose their rules on rebellious blockchain networks.
But it also generated a concerted response. Activists, still outraged by the Tornado Cash summer sanctions, urged network members to switch to non-compliant offshore block generation services.
Flashbots, a popular block building service that complies with Treasury Department sanctions, has announced that it will release an open source version of its software that others can use to create non-compliant blocks.
Although the percentage of compatible blocks reached 79% in November, the compliance rate has been on a downward trend over the past month.
In the Telegram exchange with DFD, one of the activists, Berlin-based DeFi developer Martin Keppelmann, attributed much of the decline to the creation of new block creation services that ignore the Treasury’s blacklist. In other words, the attempt to isolate the network from regulators has paid off.
Coincidentally or not, the percentage of new compatible blocks started dropping below 50% last Monday, around the same time Tether experienced a spike in usage, according to Labrys data.
Scaring stablecoin users into suddenly flocking to an offshore provider is one thing.
Of greater concern to US regulators may be the ability of the second largest crypto network to adjust its structure to avoid their reach.
Mrs. heeeeeee white papers… about how the government should deal with the rise of generative AI.
IN new from the Mercatus Center – a libertarian think tank – author Matthew Mittelstedt explains the technology to lawmakers, arguing that it will be the key to 21st century policy making.
“Even if lawmakers were to grasp the basic concepts of AI engineering and experience the depth and breadth of AI impact, it remains an open question whether they can translate this knowledge into a consensus on AI governance,” writes Mittelstedt. He then lists an “incomplete and ever-evolving list” of policy issues AI raises, including the government’s role in developing chips and algorithms, attracting immigrant talent to advance technology, and how to deal with “externalities” such as energy use and reduced workforce. . strength
“The main challenge for policy makers will be to recognize this diversity and understand that not all AI goals will peacefully coexist and will not necessarily match the goals of politicians,” concludes Mittelstedt. Good luck! — Derek Robertson
It turns out that VR technology Really Really good at tracking and identifying people.
This is the conclusion from new preprint written by a group of (mostly) UC Berkeley researchers which they said demonstrated how “after training a classification model on 5 minutes of data per person, a user can be uniquely identified among an entire pool of 50,000+ with an accuracy of 94.33 %. from 100 seconds of movement and with an accuracy of 73.20% in just 10 seconds of movement.”
The risk associated with privacy and data rights has performed well in the metaverse, but these findings stand out. Louis Rosenberg, research group advisor and one of the listed authors of the preprint, wrote for VentureBeat that “what makes the results so surprising is how little data is actually required to uniquely identify a user in the metaverse, potentially eliminating any possibility of true anonymity in virtual worlds.”
I emailed Rosenberg to see if he had any further advice or ideas for regulators and policy makers concerned about this technology, and noting that the study should be a “wake up call” for them, he noted the role of AI. to it also: “Powerful artificial intelligence techniques have been used to process massive sets of human movement data and ensure high identification accuracy,” Rosenberg wrote. “This is part of a larger trend in which artificial intelligence technologies are rapidly changing the way we think about what is possible and what is not.” — Derek Robertson
Stay in touch with the entire team: Ben Schrekinger ([email protected]); Derek Robertson ([email protected]); Mohar Chatterjee[email protected]); Steve Hueser ([email protected]); And Benton Ives ([email protected]). follow us @DigitalFuture on Twitter.
Ben Schrekinger writes for POLITICO on technology, finance and politics; he is a cryptocurrency investor.
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