Opinion: Daniel Taylor, Zumo’s Head of Policy
There are peers within the average cryptographic regulations council meeting. You will soon notice unique patterns. A crowd of Tradfi lawyers and former financial services officers responding to documents written by financial services regulators has set out a law on how cryptocurrency activities will be carried out in the future.
It speaks to the almost parallel world we see in code. On the one hand, there are integrators, assimilators, and “mainstream employers.” Meanwhile, the cutting edge of technology is almost completely removed.
Cryptographers may think this has nothing to do with them. Regulation and compliance are not areas worthy of their attention.
Taking this stance is a direct threat to today’s crypto users.
Crypto-Tradfi cutting
In May 2025, Coinbase suffered a data breaches that made it publicly available personal customer data collected by regulatory obligations during the Customer (KYC) process. It takes between $180 million and $400 million to refund customers who were scammed during subsequent social engineering attacks.
The crypto world had said that what would be obvious to many in the crypto sector would be. There is a technology solution to make this massive data collection redundant.
This can be achieved by using widely distributed digital identity and zero-knowledge cryptography to prove a claim without revealing sensitive data. If a company does not own customer data, it cannot be compromised.
The urgent need for technology to improve privacy
This is not a minor nuisance issue. It is only relevant to centralized exchanges and neocrypto intermediaries that dominate the landscape of today’s crypto users.
Whether we like it or not, the exchange remains a core-on-ramp and off-ramp with the rest of the (non-obligatory) crypto ecosystem. KYC is not the only data-heavy requirement for crypto exchanges to be published.
The UK requirements for both current (travel rules) and future (cryptoreport reporting framework) refer to a future in which users’ transactional data and real-world identity and address are neatly labelled and packaged, if not historically inappropriate, if not historically rude, or historically rude, of corporate and public data guardians.
Cryptographic users are at risk
With the rise of physical “wrench attacks” on known crypto assets owners in France and elsewhere, this should ring all the alarm bells and inspire us with a sense of collective urgency.
Recent: Rising violent code robbery: Six attacks targeting investors
Failure to build privacy-enhancing technologies across crypto brokers and applications is a crypto (social) disaster and a disaster in production. It is also increasingly unacceptable to question how native cryptographic technology can be applied to achieve comparable results.
To change images, you need to express your views in key regulatory conversations, providing technical solutions that bridge the obvious needs. Crypto consumers deserve a digital solution that offers more individual security and more individual privacy as default.
How Cryptographers Lead
The good news is that the crypto industry has a track record of implementing techno regulation innovations. The reservation system has become a common way of asserting about platforms and backing assets. The concept of privacy pools explores maintaining on-chain privacy while adhering to compliance expectations. And solutions are emerging to fully on-chise important legal functions. We need technology advocates and techno lowwayers that can marry the needs of a regulatory environment and innovation.
And if we don’t? In the current trajectory, the current regulations are almost entirely based on legacy systems and rulemaking, and should not retain the illusion that they do not take into account such factors.
If this sector wants a different future, it is necessary to ensure that policy conversations take into account not just the incumbent, Tradfi lawyers, and the litigation room, but a broader perspective.
It combines the old world with the new
The cryptographic regulation framework is at risk of law being enacted by people in the old world who have no imagination as and beyond the default reference range. We need to act promptly in our regulatory involvement to express our views from more technology-based and code origins. Otherwise, we risk find ourselves plagued by rules that have failed to innovate and adjust to the unique properties and possibilities of the crypto sector.
This means they are not standing up to bury the sand in regulatory reality and shape the future of regulation. This means that more technicians need to participate in regulatory conversations and advocate for technology, encryption and native solutions that enhance privacy.
Opinion: Daniel Taylor, Zumo’s policy director.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
