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  1. Hi all,
  2. I am a strong supporter of Dash the protocol, of Dash Core Group (DCG), Ryan Taylor as CEO of DCG and of the wider Dash community. Like many others, back in 2014 I identified Dash as being a strong protocol with superior features to other cryptocurrencies which would likely position Dash to succeed over the long term, driving adoption through innovation.
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  4. The recent delisting by Bittrex has given me pause for thought on what is the correct direction, strategically, for Dash. The Bittrex decision appears to be related to the US Treasury Financial Crimes Enforcement Network (FINCEN) labelling Monero, Zcash and Dash as Anonymity-Enhanced Cryptocurrencies (AECs).
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  6. FINCEN issued a notice of proposed rulemaking on 23rd December 2020, seeking public comments on a proposal to require banks and money service businesses (“MSBs”) to submit reports, keep records, and verify the identity of customers in relation to transactions involving convertible virtual currency (“CVC”) or digital assets with legal tender status (“legal tender digital assets” or “LTDA”) held in unhosted wallets (as defined below), or held in wallets hosted in a jurisdiction identified by FinCEN.
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  8. https://beta.regulations.gov/document/FINCEN-2020-0020-0001
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  10. Within this the notice it states,
  11. " Anonymity-enhanced cryptocurrency (“AEC”) protocols have the effect of limiting the ability of investigators or other parties to follow transaction flows on their distributed public ledgers, unlike other types of CVC that allow a bank or MSB to identify the full transaction history of the CVC or LTDA value involved in the transaction (i.e. the entire transaction history of the value from the transaction block it was mined) "
  12. Further, " Additionally, several types of AEC (e.g., Monero, Zcash, Dash, Komodo, and Beam) are increasing in popularity and employ various technologies that inhibit investigators' ability both to identify transaction activity using blockchain data and to attribute this activity to illicit activity conducted by natural persons. "
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  14. From the perspective of Dash, the official DCG wallet includes PrivateSend which clearly inhibits the ability to identify and attribute transaction activity (though it doesn't make it impossible), hence Dash being labelled as an AEC.
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  16. This is a clear difference between Bitcoin and Dash, the official dash wallet includes the 'privacy' feature PrivateSend as standard.
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  18. The cryptocurrency markets have endured a 3 year bear market which has now come to an end, and DCG's Dash Evolution Platform is now coming to fruition which is a significant milestone for Dash and ought to accelerate adoption of Dash. However, it's clear the wider market is moving away from 'privacy' coins. Now it should be obvious to all that Dash does not deserve being tarred as a 'privacy' coin yet that is what the market has done. The effect this is having and will continue to have is that it will limit the adoption of Dash as it won't be embraced as fully as it should be by users, exchanges, investors, developers and regulators. I understand the case for privacy and the use case for PrivateSend, however it doesn't make sense from a market perspective to continue to have official wallets with this feature, particularly as the volume of PrivateSend transactions is very low, I believe it is less than 1%.
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  20. Surely from a strategic viewpoint the best course of action would be to temporarily disable PrivateSend until regulatory clarity is forthcoming. This would proactively address the concerns of FINCEN and better position Dash for adoption among most users, exchanges, investors, developers and regulators. There is a limited market for privacy, we only have to look at the current market to see the success of the top protocols in the market, the lack of privacy appears to be a boon and not a deficiency. If nothing is done to address the regulatory headwinds this will effectively hold Dash back and allow competitors to come in and provide the market what it needs - cryptocurrency that is fast, efficient and user friendly for people to use.
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  22. My belief is that Privatesend is Dash's achilles heel and currently a significant risk to the future of Dash.
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  24. Furthermore, the US Department of Justice Cryptocurrency Enforcement Framework states the following;
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  26. https://www.justice.gov/ag/page/file/1326061/download
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  28. " “Mixers” and “tumblers” are entities that attempt to obfuscate the source or owner of particular units of cryptocurrency by mixing the cryptocurrency of several users prior to delivery of the units to their ultimate destination. For a fee, a customer can send cryptocurrency to a specific address that is controlled by the mixer. The mixer then commingles this cryptocurrency with funds received from other customers before sending it to the requested recipient address. Websites or companies offering mixing or tumbling services are engaged in money transmission, and therefore are MSBs subject to the BSA and other similar international regulations. In addition to facing BSA liability for failing to register, conduct AML procedures, or collect customer identification, operators of these services can be criminally liable for money laundering because these mixers and tumblers are designed specifically to “conceal or disguise the nature, the location, the source, the ownership, or the control” of a financial transaction.
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  30. A further concern is that this could potentially mean Masternodes are Money Service Businesses (MSBs) and therefore liable to all of the regulation requirements stated above.
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  32. I broadly agree with the DCG PrivateSend Legal Position and believe that temporarily disabling PrivateSend would be the correct approach from a strategic standpoint.
  33. I would like to run a poll on Discord to gauge sentiment for the temporary disablement of PrivateSend, pending regulatory clarity.
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