It’s a cliché used all too often today, but it’s true. What does it really mean? Does it mean ensuring that a bank account is accessible to all? Or does it simply enable them to open accounts that are emptied by the burgeoning predatory fee ecosystem? Or does it mean really empowering people and communities with the financial tools they require to prosper?

Sei has recently deployed integrations with Elliptic, a digital asset decisioning company. This action is being celebrated as a major breakthrough. I’m not sure that compliance by itself is really the silver bullet. Let's dig deeper.

Compliance Equals Financial Inclusion?

On the surface, it sounds promising. Elliptic's integration with Sei offers compliance solutions for financial institutions looking to use Sei's high-performance blockchain. Sei, in case you’re unaware, is a general-purpose, permissionless blockchain optimized for AI, DeFi, gaming and RWAs. In short, it's fast. Elliptic's integration means that over 500 financial institutions can now access Sei's blockchain through Elliptic's product suite, gaining comprehensive visibility into on-chain activity and conducting Compliance Risk Assessments (CRAs).

Wow, that's awesome! Here’s the thing, does simply bringing a system into compliance really mean it is inclusive? Think about it. You can make a totally compliant system that is terrible. It also risks further excluding marginalized communities through biased algorithms, predatory fees, or simple lack of awareness.

Blockchain's Double-Edged Sword

Those are the stories that really jazz me up. The narrative of actual people being empowered by their experiences with technology.

  • Cross-border payments: A migrant worker sending money home without exorbitant fees eating into their hard-earned wages.
  • Microfinance: A small business owner in a rural community gaining access to credit without navigating complex bureaucratic hurdles.
  • Direct Aid Distribution: Aid organizations delivering funds directly to vulnerable populations, cutting out corrupt intermediaries.

Here's the catch: blockchain can be a breeding ground for scams, fraud, and illicit activities. Remember the Squid Game token fiasco? People lost everything. This is the fear and trepidation that we should not shy away from.

That's where Elliptic comes in, promising AML solutions to track cross-chain transactions and proactively identify potential risks in real time. That’s awesome, in theory.

We can’t take it for granted that a compliance-driven solution powered by institutions will bring comprehensive financial inclusion. This is where something unexpected comes in.

What do you do when those compliance tools, meant to combat illicit activity, often unintentionally flag communities and transactions to/from underserved communities? What happens when the very tools designed to protect vulnerable people become tools of exclusion?

It’s time to listen to those lost voices. The community leaders, the activists, the people getting it done in their backyards to advance and innovate on financial inclusion.

Forgotten Voices and Real Solutions

She told me, "We need more than just compliance. We need education. We need support. We need systems that are designed with our communities in mind, not just with the bottom line of big banks."

Elliptic's integration with Sei is a step in the right direction, but it's just one piece of the puzzle. True financial inclusion requires a more comprehensive effort. It needs to put the interests of our most marginalized communities first and seriously address the possible dangers posed by blockchain technology. It calls on us to answer hard questions, hear those voices long silenced, and walk away from easy answers that perpetuate the status quo. Only then can we really tap blockchain’s full potential. This will lead us all on the path to a more just and equitable financial system for all.

What can we do?

  • Invest in education and training: Empower communities with the knowledge they need to navigate the world of blockchain and digital assets.
  • Develop user-friendly interfaces: Make blockchain technology accessible to everyone, regardless of their technical expertise.
  • Establish community-led governance models: Ensure that the systems we build are accountable to the communities they serve.
  • Advocate for policies that promote financial inclusion: Push for regulations that protect consumers and prevent predatory practices.

Elliptic's integration with Sei is a step in the right direction, but it's just one piece of the puzzle. True financial inclusion requires a holistic approach that prioritizes the needs of underserved communities and actively addresses the potential risks of blockchain technology. It requires us to ask tough questions, listen to forgotten voices, and challenge the status quo. Only then can we truly harness the power of blockchain to create a more just and equitable financial system for all.