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Gary Gensler: From CFTC Chair to Blockchain and Cryptocurrency Educator

Gary Gensler was chairman of the U.S Commodity Futures Trading Commission (CFTC) between 2009 and 2014, right after the global financial crisis. Today, Gensler is part of MIT’s Digital Currency Initiative, lecturing students on blockchain technology and cryptocurrencies.


Gensler was instrumental in dealing with some of the cleanup from the global financial crisis of 2008. He implemented new regulation whilst at the U.S CFTC for the unregulated swaps market which played a central role in the crisis. His work at the U.S CFTC was successful and the new oversights were implemented in advance of other regulators taking actions to mop up after the crisis.

Teaching Blockchain and Cryptocurrency at MIT

After leaving the CFTC Gensler became finance chairman for Hillary Clinton’s 2016 presidential campaign and bid. Gensler has now joined the Massachusetts Institute of Technology (MIT) Sloan School of Management and lectures on blockchain technology and cryptocurrencies.

Bullish on Blockchain

In a recent interview with The Wall Street Journal, Gensler confirmed he is “bullish” when it comes to blockchain, describing it as mimicking the distributed nature of society. However, his past work at the CFTC has left him with a “sober” eye on fast-growing financial technology.

Despite not being directly involved in U.S politics right now he has agreed to help both Republicans and Democrats in matters of cryptocurrency regulation.

Regulators Need to Bring Clarity

Regulators Need to Bring Clarity

Speaking at the MIT Technology Review’s Business of Blockchain conference in April 2018, Gensler said that government officials needed to look to regulate the larger cryptocurrencies as well as new ICO tokens.

“The SEC and regulators need to bring clarity,” said Gensler, many cryptocurrencies “are operating outside of U.S. laws.”

Gensler was quoted in a subsequent debate over Ripple describing it as a “noncompliant security” due to its centralized distribution model.

The CFTC is Better Placed to Regulate the Sector

Last week, July 19, 2018, Gensler spoke at U.S Congressional hearings on cryptocurrencies and blockchain technologies giving five reasons why he believes blockchain technology can make a real difference in the financial sector.

Gensler said blockchain lowers costs and risks and can give stability and prevent illicit activities if regulated. But, the U.S Securities and Exchange Commission (SEC) and U.S CFTC have a role to play as the ICO market is ripe with scams and fraud and there are gaps in U.S law, especially when it comes to exchanges.

Gensler also believes the U.S CFTC is better placed to regulate cryptocurrency markets.

Do you agree with Gensler? Who is better placed to regulate cryptocurrencies in the U.S, the CFTC or the SEC? Let us know what you think in the comments below.


Images courtesy of Shutterstock, Flickr

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Peter Todd Exposes MIT ChainAnchor Project That Enables Tracking Bitcoin User’s Identity

Source: bitcoin

Peter Todd Exposes MIT ChainAnchor Project That Enables Tracking Bitcoin User’s Identity

In a surprising development on Wednesday, Bitcoin developer Peter Todd released information around MIT’s ChainAnchor project. ChainAnchor supposedly involves enticing miners with additional compensation to ensure that only transactions from a list of identified and registered users are included in blocks. The news comes at a time of accelerating initiatives to adopt facets of Bitcoin’s Blockchain technology into traditional banking and trading of other digital assets or securities.

Also Read: FBI Used Invalid Warrant To Infect Tor Website With Malware

The uses all fall under AML or KYC regulations that ChainAnchor would help with. Identity has long been at the core of issues involving Blockchain acceptance by regulators. ChainAnchor project seems to be the most pointed attempt yet to implement an additional technology layer to help require the revealing of one’s legal name. All this to be included in confirmations on the Bitcoin Blockchain.

ChainAnchor to Expose Users

See: White Paper for ChainAnchor here.

Mr. Todd cites a slide deck obtained and made public which details the technical specifics and roadmap for the implementation of this identity-layer. As Mr. Todd states, “If ChainAnchor is fully successful to use Bitcoin at all you would be required to first register your real world identity. Your transactions would be linked to that identity in a way that that a court order, or even a hacker, could uncover full details on every Bitcoin transaction you make – your entire financial history, and for that matter, the full financial history of all Bitcoin users.”

At first, the ChainAnchor would require registration of public keys under a system that verifies one’s government given identity, though this would initially be opted into. If the system administrators intervene through linking Intel’s EPID group signature schemes to individual transactions, then transactions associated with these keys could be tied back to the real-life identity of that user. thereby making these transactions vetted under the law. “This means that the privacy of the system is based on trust: the permissions verifier and identity provider can undetectable deanonymize a user by colluding to combine the real-world identity and cryptographic identity information that each side is supposed to keep secret from the other,” Mr. Todd remarked.

Those in oversight of such a system would recreate many of the problems inherent in centralized trust models. System administrators would, according to Mr. Todd, “have the sole ability to add new members, as well as the ability to revoke membership, with or without the co-operation of the member in question.”

Miners Key To ChainAnchor

Transactions that fall into the “non-permissioned” or not verified group will be discouraged from being included in the increasingly rare space available within blocks. As a result transaction fees would be expected to rise, and in a world of exceptionally difficult mining environment and a block-reward halving the fees paid to miners will rise in importance for obtaining priority. More importantly, miners would be strongly incentivized or arguably coerced into accepting these permissioned or “Whitelist” transactions. Miner operators would likely be required to register under such a setup, too.

Mr. Todd added, “While not in the paper or slides specifically, allegedly the final stage to ChainAnchor is to eliminate unregistered, non-compliant miners from Bitcoin entirely by gradually reducing their profitability until they stop mining or become compliant.”

The Bitcoin Blockchain is a fully transparent, open database architecture with time ordered and immutable data, which relies on fully independent nodes to compete in a game to solve blocks for monetary rewards. Often left out, however, is the necessity to have an incentive token for miners to strive for while maintaining the database securely and fully independently. Through providing an extra monetary incentive, the ChainAnchor project is flipping the economics and trust model towards including only registered or personally identifiable transactions. In turn, this will hurt the neutrality and equality in inclusion facilitated by Blockchain technology.

In response to this, Mr. Todd presented a scenario where users who are not registered could have their transactions included in blocks; “But what happens if users do not leave? For example, users could respond to reduced non-compliant transaction capacity with higher fees – an especially palatable option if layer two scaling solutions like Lightning making users less sensitive to higher fees and longer on-chain confirmation times. In a perfect market without artificial barriers ChainAnchor would in turn have to respond by increasing the bribes paid for compliancy – obviously this could get rather expensive!”

ChainAnchor’s initiative plays into a larger story around enabling privacy online. As the Lightning network and other off-chain solutions are released, the tensions caused through decentralized systems will grow in noise. The discussion around digital privacy is an important one for everyone to be involved with in order to answer difficult questions. Regulators and established financial institutions understandably need to identify those transacting assets to monitor threats, and rightfully so in a time of political and economic uncertainty. Technological developments, however, are forcing us to ask new questions around what behavior should or shouldn’t be allowed in how we create and manage information.

What are your thoughts on the ChainAnchor project? Is identity tracking justifiable if done through an abstraction layer? Share your thoughts below!


Image Source:Bitcoinist.net, perivansolutions.co.uk

The post Peter Todd Exposes MIT ChainAnchor Project That Enables Tracking Bitcoin User’s Identity appeared first on Bitcoinist.net.

Peter Todd Exposes MIT ChainAnchor Project That Enables Tracking Bitcoin User’s Identity

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