Perverse Outcomes: FATF, Bitcoin and Financial Exclusion

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

In last week’s column — my third on Libra — I referred to a core dilemma confronting the cryptocurrency project’s financial inclusion goals: the impossibility of being both pro-privacy and pro-KYC.

I promise a break this week from Libra and its controversial founder, Facebook. But I want to dive deeper into that dilemma because the problem is hardly unique to that project. As “know-your-customer” rules have steadily encroached into their world, all cryptocurrency startups trying to expand financial access for the poor are hamstrung by requirements to identify and track the people they seek to serve.

This contradiction stems from tough policies contained under…