One of the longest running tensions in crypto has little to do with price cycles or network performance, but with privacy and compliance.
Users want anonymity and control over their data, while regulators demand transparency and identity checks to prevent fraud.
Finding a workable balance between the two has become one of the industry's most pressing challenges.
During a recent interview with TheStreet Roundtable , that question was put directly to Anastasia Shvechkova, head of compliance at Sumsub.
She described it as a problem nearly every serious crypto company is trying to solve.
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Balancing safety with freedom
The goal, she explained, is to keep platforms safe without forcing users to give up the core principles that drew them to decentralized systems in the first place.
"There's definitely a very real need to fight fraud and keep the space safe," she said. "At the same time, people come to web3 because they want more control over their information and how it's shared."
That tension has slowed adoption in some areas, particularly where compliance requirements resemble traditional finance too closely. Shvechkova said many users resist systems that require them to hand over personal data by default.
"A lot of users don't want to give up all of their information upfront just to interact with a protocol," she said. "They want to be able to decide when and how that information is used."
Rather than waiting for regulatory frameworks to catch up, Shvechkova said progress is coming from the technology layer. "Regulation moves slowly," she said. "Technology doesn't."
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Own your data
Instead of centralized databases, Shvechkova described systems built around user owned credentials as a better solution.
"We're partnering with companies, with blockchains and with layer 1s to give users the ability to own their own data," she said. "The idea is that the user keeps control, and only shares what is necessary in a given context."
"It's not about avoiding compliance," Shvechkova said. "It's about implementing compliance in a way that doesn't destroy privacy or create massive data honeypots."
Those data honeypots, she noted, are one of the biggest risks in traditional finance . Centralized storage of sensitive information creates attractive targets for hackers and bad actors. By contrast, decentralized identity systems aim to reduce that risk by minimizing how much data is ever shared or stored.
As crypto infrastructure matures, that balance may become a key differentiator. Firms that can offer privacy by default, with compliance when necessary, may be better positioned as regulators and institutions deepen their engagement with blockchain technology.
For Shvechkova, the challenge is no longer choosing between privacy and compliance, but proving that the industry can finally support both at the same time.
This story was originally published by TheStreet on Jan 28, 2026, where it first appeared in the Innovation section. Add TheStreet as a Preferred Source by clicking here.
