"Atkins underscored that public blockchains are "more transparent than any legacy financial system ever built," with every transaction recorded on a ledger accessible to anyone. Atkins also said that chain analytics firms are already adept at linking on-chain activity to off-chain identities."
"The chairman cautioned against a regulatory approach that treats every wallet as a broker and every transaction as reportable, which he said could transform the ecosystem into a "financial panopticon." Such transparency, Atkins explained, could also disrupt traditional market functions: real-time visibility of orders, hedges, and portfolio adjustments could incentivize front-running, copycat strategies, and other dynamics that make market-making and underwriting less attractive."
"He pointed to blockchain that allow users to demonstrate compliance without revealing their entire financial history. "Shielding the lawful activity of our citizens from bulk surveillance while still ensuring that our government can perform essential functions is the best way to protect both national security and our basic civil liberties while also giving room for innovation to flourish," Atkins said."
Public blockchains record every transaction on an open ledger, producing unprecedented transparency compared with legacy financial systems. Chain analytics firms can link on-chain activity to off-chain identities, creating potential for powerful financial surveillance if misapplied. Treating every wallet as a broker or every transaction as reportable risks transforming the ecosystem into a surveillance architecture that harms market liquidity and incentives. Real-time visibility of orders and hedges can encourage front-running and copycat strategies, reducing appetite for market-making and underwriting. Privacy-preserving blockchain tools can enable compliance checks without exposing full financial histories, balancing security, civil liberties, and innovation.
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