Opinion by: Daniel Taylor, head of policy in Zumo
Peer within the average crypto regulatory consultation meeting, and you will quickly notice a unique pattern: Lights of Tradfi lawyers and financial service personnel addressing the documents written by financial service regulators, which puts the law on how to carry out crypto-owned activities in future.
It speaks to the almost identical world we have seen in crypto. On the one hand, there are integrators, assimilators and the “mainstream adopters.” On the other hand, the technological cutting edge is almost completely removed.
Crypto technologies may think that it has nothing to do with them – regulation and compliance are not places that deserve either their attention.
Getting this bearing is a direct threat to crypto users today.
Crypto-tradfi disconnect
In May 2025, Coinbase suffered a data breach Exposure to personal customer data accumulated by regulatory obligation during the process of your customer (KYC). It has set aside between $ 180 million and $ 400 million to pay customers who are destroying subsequent social engineering attacks.
The crypto world has responded to the state as to what many in the crypto sector: that technology solutions exist to make such a mass collection of mass collection redundant.
This can be achieved through the widespread use of decentralized digital identity and zero-knowledge cryptography to prove claims without exposing sensitive data. If businesses do not possess customer data, they cannot compromise it.
The urgent need for privacy enhancement technologies
This is not a question of minor frustration-only related to centralized exchanges and neo-crypto mediators that lead the user’s landscape today.
Whether we like it or not, the exchanges remain core on- and off-ramp to the rest of the (non-custodial) crypto ecosystem. KYC is not the only data that is heavy data on which crypto exchanges are exposed.
Other requirements in the UK, both current (travel rule) and future (cryptoasset reporting framework), pointing towards a future where users and real identities and addresses and addresses are properly labeled and wrapped under historical non -guardians, if not righteous exploitation, corporate and public authority.
Crypto users are at risk
With the increase of physical “Wrench attack” To the well -known Crypto asset holders in France and elsewhere, it should be all our alarm bells and inspires us a sense of unfortunate fashion.
Recently: Violent crypto robbery on increases: six attacks that target investors
Failure to build on privacy improvement technologies within crypto mediators and within applications dramatically is a crypto disaster (not to mention social) job disaster. And not asking how crypto-native technologies can be applied to achieve equivalent outcomes are increasingly futile.
Photo change requires representing that opinion in regulatory communication that is important and provides technology solutions that bridge the clear needs. Crypto consumers deserve digital solutions that provide more individual security and more individual privacy by default.
How are crypto technologies
The good news is that the crypto industry has a track record in the introduction of modern technologies. Proof-of-reserve systems have become a common way to make claims about platforms and backing assets. The concepts in the privacy pool will explore the preservation of onchain privacy while following compliance expectations. And the solutions are emerging to bring critical legal function fully onchain. We need more technology and technology advocates who can marry modern technology with the needs of the regulatory environment.
And if we’re not? We should not handle any illusions that, in the current trajectory, the current regulations that are finalized are based on almost completely in legacy systems and decisions and certainly do not consider any factors.
If the sector wants the future to be different, we must make sure that the policy communication is not held only in a room of incumbents, Tradfi lawyers and is adjusted but rather a broader view of the account.
Combines the old world and the new
The frameworks of crypto regulation are at risk of becoming the law of the old world as their default reference range and no imagination to see beyond it. We must act quickly to represent more tech and crypto-based views-based regulatory contacts. Otherwise, we risk finding ourselves as sad as policies that cannot be changed and adapted to the unique characteristics and potential of the crypto asset sector.
This means that the heads in the sand are no longer buried in the facts of regulation and standing to shape future regulation. This means that many technologists should join the regulatory conversation to champion technologies that enhance privacy and crypto-native solutions.
Opinion by: Daniel Taylor, head of Zumo policy.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
