Policy Proposal Idea

Primary Proposal: A "Privacy-Preserving Public Digital Infrastructure & Statutory Right to Self-Custody Act"

• The Core Problem: Public policymakers currently oscillate between two flawed extremes: either leaving retail users exposed to unregulated, opaque offshore exchanges (like FTX), or imposing dragnet financial surveillance and pushing Central Bank Digital Currencies (CBDCs) that strip citizens of financial privacy and create centralized data "honeypots."

• The Three-Pillar Policy Solution:

1. Codify the Right to Self-Custody and Open-Source Node Operation: Explicitly distinguish in law between centralized custodial intermediaries (which must be strictly regulated for solvency, off-balance-sheet bankruptcy remoteness, and auditing—modeled on Switzerland’s FINMA "Crypto-Institution" and "Payment Instrument" licenses and Liechtenstein’s TVTG / Blockchain Act) and non-custodial open-source protocols and self-hosted wallets. Citizens and cooperatives must have the statutory right to hold their own cryptographic keys and run validation nodes without being treated as unlicensed money transmitters.

2. Statutory Right to Self-Custody & Multi-Signature Architecture: Enshrine in law the right of individuals, charities, and corporations to hold digital assets in self-custodial hardware and multi-signature setups (such as 6-of-9 multi-vendor HSM architectures) and to run validation nodes, explicitly exempting non-custodial software developers and open-source protocols from financial intermediary licensing.

3. Mandate Zero-Knowledge Compliance ("ZK-KYC" & "Know Your Agent"): Replace bulk personal-data collection with cryptographic verification. As you noted in your Zurich keynote (The Future of Payment & Tokenization on Blockchain), "public ledgers are transparent by design, which creates a privacy imperative. We must use advanced cryptography to protect trade secrets and intellectual property, prevent front-running, and avoid creating security 'honeypots'." Regulators should officially recognize Zero-Knowledge Proofs (ZKPs) and Self-Sovereign Identity (SSI) so citizens—and soon autonomous AI software under "KYA (Know Your Agent)"—can mathematically prove regulatory compliance (such as non-sanctioned status or tax residency) without surrendering their identity or transaction history to centralized corporate databases.

4. Integrate Flexible-Load Mining into Public Renewable Grid Policy: Rather than blanket restrictions on Proof-of-Work, energy regulators should classify cryptographic compute and Bitcoin mining as an automated demand-response "flexible load option" to underwrite sovereign renewable microgrids and capture wasted methane flares.

5. Democratizing Community Infrastructure (Public RWA Tokenization): Allow local councils and community land trusts to issue fractionalized, tokenized municipal bonds (in denominations as low as £10) directly to local residents to fund social housing, local transport, and cooperative enterprises—bypassing expensive City of London underwriting fees and keeping investment yields inside working-class communities.

6. Bankruptcy-Remote Segregation for Centralized Custodians: As the UK FCA authorisation gateway (opened September 30, 2026) brings crypto exchanges and stablecoin issuers under FSMA supervision, require all centralized custodians to hold client digital assets off-balance-sheet with cryptographic Proof-of-Reserves (modeled on Switzerland’s FINMA "Crypto-Institution" license and Liechtenstein’s TVTG), making customer funds 100% bankruptcy-remote.

7. Establish the World’s First Statutory "Know Your Agent" (KYA) Framework: Create a legal and cryptographic standard allowing UK businesses, public institutions, and cooperatives to register autonomous AI agents and robotic hardware with verifiable decentralized IDs and cryptographically bounded spending limits.