The unique power of blockchain and cryptocurrency can also be considered their weakness. Crypto users gain unparalleled privacy for financial transactions through a decentralized transactional system. Governments, however, demand transparency in financial transactions for legal concerns. This creates a paradox. People are less inclined to use financial instruments if, in doing so, they expose their money to the world. Conversely, there are a number of regulations requiring financial institutions to counteract terrorism and money laundering — serious concerns for many governments.
The crux of the issue is that most public blockchains require a consensus of all participants to validate transactions. How can both sides — individual users and governments — achieve their conflicting objectives when they’re diametrically opposed?