In a presentation at the Proof of Work Summit, J. Gdanski, CEO and founder at Evertas, spoke about the relationship between financial regulations, privacy erosion, and the broader implications for human rights and national security.
His talk shed light on the significant challenges posed by existing regulatory frameworks.
Evertas is a crypto insurance company that provides A+-rated coverage for new risks based on timeless principles.
It is the only crypto insurance provider in the Lloyd’s of London marketplace, and its policies carry a good creditworthiness rating.
The firm protects crypto custodians, exchanges, investment funds, family offices, and mining operations. Evertas has policy-writing authority on six continents and offers a high per-incident coverage limit.
Centralized custody of data
Speaking from a wealth of experience in the financial industry and now in crypto and insurance, the CEO said that financial data is a goldmine of personal information.
Everything from travel history, and expenses to political affiliations, medical records, and more can be extracted from this data. Moreover, this information is not only collected but is also held by third parties, which raises concerns about data security and misuse.
During his discussion with the audience, he provided an example of financial information leakage. Specifically, he mentioned the suspicious activity reports leaked by the Financial Crimes Enforcement Network.
This incident highlights the vulnerability of sensitive financial data, putting individuals at risk of data breaches and privacy infringements.
Moreover, it’s important to recognize that privacy and security concerns extend beyond personal well-being to national security.
The founder emphasized that financial data leaks can pose significant security risks, particularly when influential figures like billionaires have their financial information compromised.
The use of financial regulations
He added that financial regulations aren’t limited to national boundaries. Jay pointed out that these regulations have a substantial impact on international financial systems.
The United States, in particular, wields significant influence in this realm. It’s important to acknowledge the far-reaching effects of these regulations beyond a single country.
Gdanski also talked about the supposed use of sanctions, often as a tool to combat illegal activities. He argued that sanctions, whether aimed at countries or individuals, may take a long time to be effective and can result in unintended consequences.
He pointed to examples like Iran, where sanctions didn’t have the desired effect despite years of concerted efforts.
Iran has faced several financial sanctions imposed by various countries and international organizations, such as the United Nations.
These sanctions, which included restrictions on trade, arms embargoes, and the freezing of assets of certain individuals and entities, have been primarily driven by concerns about Iran’s nuclear program, support for terrorist organizations, and human rights abuses.
The United States has also implemented some of the most comprehensive sanctions against Iran, one notable example being its withdrawal from the Iran nuclear deal (Joint Comprehensive Plan of Action, or JCPOA), in 2018.
These sanctions have targeted Iran’s energy sector, financial institutions, and individuals and entities involved in activities such as terrorism and human rights abuses. The EU and Swift are other organizations that have cut ties with the Middle Eastern nation.
Beyond the financial industry
Furthermore, the CEO said that the impact of financial regulations isn’t limited to financial matters alone. It extends to political and social aspects. Jay illustrated this with the concept of “Operation Choke Point,” which can have a detrimental impact on lawful businesses.
Operation Choke Point was an initiative launched by the U.S. Department of Justice (DOJ) in 2013.
Its primary goal was to combat fraudulent and high-risk financial activities by pressuring banks and financial institutions to cut off access to certain businesses and industries that were considered at higher risk for fraud or illicit activities.
While financial regulations are important, Gdanski urged the audience to rethink the current approach to financial regulations.
Reflecting on how the crypto market has evolved, he proposed that, instead of mass surveillance and restrictive regulations, governments should focus on reforming taxation and improving fraud detection. The current system, he argued, is ineffective, costly, and undermines democratic values.
