US Financial Surveillance Agency Wants to Know More About Privacy Tech

27 May 2021

The U.S. Financial Crimes Enforcement Network (FinCEN) wants to increase its understanding of how privacy technology works, including those governing certain blockchain protocols.

The agency is expected to host a virtual program on Sept. 9 and is inviting companies “developing solutions to privacy issues” to participate, according to a press release on Wednesday.

FinCEN said the event will focus on the role of “privacy-preserving principles” in developing technical solutions that increase innovation in financial services while countering the well-worn narrative of illicit activity and national security risks.

Those being asked to tag along to the agency’s “Innovation Hours Program” include Fintechs, Regtechs, venture capital firms and financial institutions.

See also: State of Crypto: FATF’s New Guidance Takes Aim at DeFi

Privacy solutions being targeted include cryptographic zero-knowledge proofs (ZKP) and homomorphic encryption. ZKP allows two parties to prove a value is true, such as x, without revealing the identity of either party.

Though the concept stems from the 1980s, its technology has been bootstrapped to certain blockchain projects and protocols, including those used by Zcash and Mina.

The agency is asking participants to demonstrate, in one-hour meetings, just how these types of solutions operate and how businesses use them. That includes ways in which the privacy solutions can be utilized for private and public sector efforts, per the release.

“We support responsible innovation,” said Michael Mosier, FinCEN’s newly appointed Acting Director, “especially that which promotes the resilience and safety of our financial system and the American people.”

Mosier, who worked at blockchain surveillance firm Chainalysis as chief technical counsel before his departure in 2020, will likely bring additional knowledge regarding blockchain privacy to the agency’s event.

See also: Civil Liberties Group Calls FinCEN Crypto Wallet Rule ‘Unconstitutional’

Those interested should submit a request online before July 23 and provide relevant background information regarding their firm’s business and products, FinCEN said.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.