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a16z Lobbies FinCEN to Adopt ‘Privacy-First’ ZKP Identity for National Security

a16z Lobbies FinCEN to Adopt ‘Privacy-First’ ZKP Identity for National Security

CoinEditionCoinEdition2025/11/11 16:00
By:Coin Edition

a16z has urged the U.S. Treasury to adopt decentralized digital identities to strengthen national security and protect civil liberties The firm believes that FINCEN should use the exceptive relief authority to allow financial institutions to adopt digital identity solutions Dozens of projects led by Worldcoin (WLD) have succeeded in onboarding millions of global users

  • a16z has urged the U.S. Treasury to adopt decentralized digital identities to strengthen national security and protect civil liberties
  • The firm believes that FINCEN should use the exceptive relief authority to allow financial institutions to adopt digital identity solutions
  • Dozens of projects led by Worldcoin (WLD) have succeeded in onboarding millions of global users

Andreessen Horowitz (a16z) has urged the U.S. Treasury to adopt decentralized digital identity solutions. In a formal response regarding the GENIUS Act, a16z stated that the Financial Crimes Enforcement Network (FinCEN) must update its Anti-Money Laundering (AML) framework to encompass this new technology.

a16z: ZKP Is Key to Privacy, Adoption, and National Security

According to the report from a16z, the siloed regulatory framework on AML has hindered innovation. As such, the crypto investment firm urged FinCEN to accommodate proven privacy-centric innovation such as Zero-Knowledge Proofs (ZKP) and multi-party computation (MPC). 

According to a16z, the privacy-centric digital identity verification is key to enabling mainstream adoption of digital assets and web3 protocols in a regulated manner while still empowering individuals to control their data.

Related: Will Donald Trump’s Tariff Policies Impact Global Cryptocurrency Market Sentiment?

Korver: A ‘Once-in-a-Generation Opportunity’ for US Leadership

According to Michele Korver, a regulation expert at a16z, the need for digital identity verification is key to enhancing collaboration between private and public entities. Furthermore, the web3 protocols have been adopting digital identities but lack the legal framework to collaborate with traditional firms due to stringent regulations.

“As the U.S. implements GENIUS, it has a once-in-a-generation opportunity to lead in responsible, privacy-first innovation that strengthens the economy and freedom alike, and a balanced GENIUS framework can unlock U.S. leadership in digital finance,” Korver noted  

According to a16z, it is paramount that the U.S. Treasury adopt digital identity verification to enhance the country’s security. With digital identity verification requiring low cost of maintenance compared to the traditional way, a16z believes that it will enhance compliance, reduce fraud, and improve the detection of illicit transactions.

The $3.4B Digital Identity Market Awaiting Clarity

The decentralized digital identity space has grown exponentially in the past few years. The decentralized financial (DeFi) space has seen a huge demand for digital identities to enhance their regulatory compliance through know-your-customer (KYC) integration.

According to market data analysis from CoinMarketCap, the crypto projects focused on digital identity have a market cap of around $3.4 billion. Worldcoin (WLD) is the largest digital identity project with a market cap of around $1.8 billion.

Backed by OpenAI CEO, Sam Altman, the Worldcoin project has grown to over 37.4 million users. Meanwhile, the WLD price has gained 10% in the past seven days to trade at about $0.79 at press time. 

Other notable digital identity crypto projects include Humanity Protocol (H), MultiverseX (EGLD), Concordium (CCD), and Moca Network (MOCA), among others.

Related: Paradigm Urges Treasury To Keep GENIUS Act Stablecoin Rules In Line With Statute

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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