Great write up.
The KYC/AML rules are so ubiquitouss, ecash providers will comply because retribution (jail time for illegal money transfers) is sadly real. Only if that changes in the US will privacy be returned.
Discussion
Thanks! Appreciate it.
I see 3 possibilities regarding this considering the current environment:
1. They are registered businesses, that have to implement some form of kyc. A kyc'ed ecash custodian could still be an improvement over a regular one, depending on how it is implemented. If you can do private p2p transactions, that would be something a regular custodial service cannot offer you, but a kyc'ed ecash service could, by leveraging blind authentication. I still think this is pretty lame, and I'm not sure if i'd use it.
2. They are small enough to not be a target,. Imagining hundreds of small cyber banks all for small scale payments. Not very useful for money laundering, so likely not targets for law enforcement.
3. They operate in the shadows or in a jurisdiction that doesn't discriminate against privacy. I wouldn't be surprised if we see either/or in the future.
Of course these are only for the "payments service" usecase.
What do you think, did I miss any?
Here is my current thinking...
Ecash becomes relevant only when businesses start to use it - p2p is at best an edge case without businesses.
In less regulated markets, business operators will look to any service provider that gives a Digital Dollar (USDT) ramp and obscurity with local government. The hurdle here for ecash is why wouldn't a USDT wallet transaction suffice? Wallet to wallet. No third party. e.g. Aqua wallet.
In western markets, Businesses that want to use ecash will look only to Regulated Mints. This will mean KYC.
Big Brands (e.g. Starbucks) may host their own as KYC is something they want - i.e. a loyalty program, where they can leverage customer data. (Loyalty and money becoming fused is a scary prospect that I hope ecash can subvert).
But regulated mints will only be able to exchange with regulated mints. The rules are designed so they can follow the money and know all the in and outs (people).
And authorities have fierce record of chasing unregulated money businesses, even offshore. As soon as real money starts to flow they cut the head off the snake.
So KYC will surveil ecash, just like it is on everything else. And I can't see any government releasing the tracking now its in place.
I would love this to not be so.
The only way out that I can see is: have mint tokens pegged to the underlying collateral (Arc), and make every wallet a mint.
I really love ecash but the use case has really been stopping me going fully in.