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Twitter and Square CEO Jack Dorsey cautioned against proposed new regulations to regulate digital currencies.
Dorsey pointed out that the settlement is hurting Square, a financial services company, in a letter posted on the company’s website.
In October, Square bought $ 50 million worth of Bitcoin and the company has also invested heavily in the cryptocurrency ecosystem, so Square has a lot of interest in this area.
“Regulations create unnecessary friction and perverse incentives for cryptocurrency customers that can cause regulatory entities to avoid cryptocurrency transactions,” wrote Jack Dorsey.
The regulation, proposed by FinCEN, requires financial institutions, such as Square, to collect personal information about parties involved in cryptocurrency transactions.
But the most important suggestion is that financial institutions collect the name and physical address of both parties in any major transaction they engage in.
The regulation aims to help prevent certain illegal uses of cryptocurrencies, such as: drug trafficking, money laundering and the financing of international terrorism.
Dorsey’s main complaint is that it can create unnecessary friction between cryptocurrency users and financial institutions, which could lead to perverse incentives.
And if the regulations go into effect, they will force Square to collect unreliable data on people who have not signed up for the service or who have not subscribed to the company as customers.
Dorsey, along with other privacy advocates, sees the requirements as a transgression, especially given the open nature of blockchain technology.
Dorsey argues that regulations can cause clients to use wallets or services located outside of the United States and transfer assets to them.
This weakens the effectiveness of the Financial Crime Network in the world of digital currency transactions.
And if people were to provide private information to a bank to complete a transaction, they would avoid using the bank, which the CEO describes as a perverse inducement.
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