Regulatory Risk to the Zcash Ecosystem and the ZEC currency

[noamchom]

@Milton

No single jurisdiction can be relied upon. Zcash needs to have self-sustained organizations in multiple non-aligned jurisdictions.

Yes, we’re in strong agreement. But as the Zcash ecosystem exists right now, we are completely relying on the USA and an environment where the SEC continues to take no action wrt The Howey Test and the capacity to prosecute certain ZEC sellers as unregistered securities brokers.

Ideally the distribution of ZEC by the block rewards entities would be occurring through legally registered paths, both inside and outside of the USA. Being All-in on the USA currently is a large carry of risk to the context that none of the 3 block reward entities are registered to be brokering their ZEC.

@Milton

I think USA, Hong Kong and Singapore are the most useful jurisdictions for Zcash. The US has gotten a bad rep lately, but it is the only Western country imo that has a chance of not banning privacy preserving crypto because of its constitutional protections.

I’m not sure that I agree about HK. I would assert that Switzerland could be a better #3 jurisdiction (And Shielded Labs is already making great progress in Switzerland). Portugal, The Czech Republic, Ireland, and El Salvador also come to mind. I worry that you overestimate the USA’s palate for respecting constitutional protections granted to citizens on paper… Let’s have a revisit of the Edward Snowden leaks, as one flagship example of the USA not actually upholding the constitutional rights of its citizenry. To the context of anything economic-financial-commercial, we would be acting naively to assume that the USA wouldn’t also exercise behind the scenes constitutional violations.

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@ZecMec

And could smaller jurisdictions be relied upon as being sturdy enough to resist future US political pressure or potentially even sanctions, were the US to ultimately pursue a fully draconian anti-crypto / anti-democracy path?

It is these questions that are most concerning. Between the three block reward entities there are around 500,000 ZEC in possession and more than $15,000,000. It would be catastrophic if the USA SEC took prosecutorial action against these core Zcash ecosystem builders and caused those assets to be frozen or seized.

@ZecMec

De-chartering the three entities and removing Zcash operations to non antagonistic jurisdictions may be expensive, but clearly not as expensive as the worst negative outcomes possible in the event that the entities are prosecuted by US regulators…

This discussion has me continually thinking of an age old aphorism.
An ounce of prevention is worth a pound of cure