At Consensus Miami, representatives from Moody’s and ChangeNOW explained why the conflict between user anonymity and regulatory requirements is not a dead end, but an engineering challenge with workable solutions.
A False Dilemma
Public blockchains are transparent by nature: every transaction is recorded, accessible, and can be tracked. This makes them suitable for auditing and monitoring—but at the same time, it makes users’ financial activity available in a way that is incompatible with basic notions of privacy.
The traditional solution to this contradiction in the financial system is participant identification: KYC, passports, linking accounts to identities. This works for banks. But it contradicts one of the original principles of cryptocurrencies—the ability to transact without mandatory identity disclosure.
The discussion at Consensus offered a different framework: the problem is solved not by choosing between privacy and transparency, but by dividing tasks between different layers of the system.
Hybrid Architecture as the Answer
Rajiv Bamra from Moody’s described the logic of an “intelligent layer” in blockchain through three questions that traditional finance has always asked: who is the participant, what are they doing, can the record be trusted. In the banking system, these questions are answered by banks, custodians, and clearing organizations.
In blockchain, this work can be distributed differently. Closed permissioned networks give institutions the necessary accountability and legal transparency. Public permissionless networks provide liquidity that closed networks cannot generate. Tools for analyzing transactions work at the wallet address level—without automatically linking every transaction to a specific person.
According to Bamra, the institutional digital finance market is now about $35 billion—compared to more than $200 trillion in annual turnover in traditional clearing systems. In the past 18 months, the segment has grown by more than 100–150%. The scaling potential is obvious, but the infrastructure gap is huge.
Monitoring Addresses Instead of Identifying People
ChangeNOW is a non-custodial exchange that does not require KYC by default. The company’s chief strategist, Pauline Shanjett, explained how this aligns with compliance for regulators and law enforcement.
The company works with AML providers and analysis tools that track flows at the wallet address level.
“All this infrastructure allows us not to track the people moving funds through our system, but to track their addresses,” she said.
When law enforcement contacts ChangeNOW, the company provides transaction data—without disclosing the identity of the person behind the address. This allows for both maintaining anonymity for regular users and fulfilling obligations to regulators when illegal funds appear.
Shanjett also proposed a fundamental division of responsibility: regulatory obligations should fall on those who issue assets, not on those who transfer them.
“The agents who should be responsible for regulatory frameworks are the agents working with issuance, not with transfer,” she said.
Regulatory Convergence in Words, Fragmentation in Practice
Bamra identified a key contradiction in global regulation. MiCA in Europe and the American GENIUS Act pose similar questions—about asset quality, segregation, and responsibility. At the level of intent, regulators are moving in the same direction.
But at the level of specific requirements, the picture is different. Differences in definitions, thresholds, oversight mechanisms, and responsibility between jurisdictions create a fragmented environment in which market participants have to build different compliance processes for each market.
“We believe there is convergence in intent, but in reality—fragmentation,” Bamra said.
What This Changes in Practice
The conversation about privacy and transparency in blockchain often remains abstract. The specifics from the panelists show that workable solutions already exist and are being applied.
Address-level monitoring without KYC, hybrid architectures separating public and closed layers, forensics as a compliance tool—all of this is not theory, but current practice. The question is not whether it is possible to combine privacy and accountability.
The question is how quickly these practices will become standard, and whether the regulatory environment will keep up with the technological solution to the problem it created.
Read more: WLFI Versus Rumors and Justin Sun. Trump Jr. Took the Stage in Miami
