Wayne Chang

We submit our letter to the U.S. Department of the Treasury in response to its Request for Comment on innovative methods to detect illicit activity involving digital assets, Docket Number–2025-0070. In it, we introduce six core pillars on which modern identity systems must be built: 🔹 Data Minimization: Only disclose what is strictly necessary 🔹 User Control: Users must hold and manage their own credentials 🔹 Open Standards: Systems should be built using open and widely available standards such as W3C Verifiable Credentials and DIDs 🔹 No Mandatory Intermediaries: Users must be able to prove eligibility without being required to go through centralized brokers. Users should be free to choose intermediaries if they want one, but systems must not hardcode their use. Where access is required, it should be based on auditable proofs of attributes, not full identities. 🔹 Voluntary Adoption: Digital identity systems must remain optional. Users must retain the right to complete compliance through traditional paper-based methods without penalty or discrimination 🔹 Purpose Limitation: Identity data must only be usable for its intended function, with strong technical and legal enforcement Treasury should resist the temptation to retrofit legacy frameworks onto public blockchains and instead look to the native attributes of decentralized, cryptographically secure architectures. These tools can protect civil liberties while enhancing compliance integrity by minimizing honeypots, chokepoints, and governance opacity. We would like to thank Aisling Connolly (@TACEO_IO), @kimdhamilton (@DecentralizedI6), @mikednorman (@Consensys), and @wycdd (@SpruceID) for their expertise in privacy-preserving identity systems, cryptographic protocols, and decentralized governance. Link in comments.