Interesting article and perhaps I need to read it closer but generally agree that there’s an inherent tension between the opt-in nature of most privacy-focused projects’ regulatory compliance strategy and the reality that that is almost always insufficient for regulators (no one who would ever opt-in will be people regulators care about for the most part).
A nuanced approach to privacy should be adopted in blockchain projects, where privacy is protected while regulation is needed to prevent abuse, and innovative solutions are used to strike a balance between privacy and regulatory compliance.
The basic premise that has not been answered here is who holds the keys?
Ie, do you give those keys to the US, the Chinese, the Russians, the Iranians, the Swiss, or someone else?
If you decide upon the US, then the Chinese won’t like your system and vice-versa. By building keys, that necessarily must be held by someone, you are removing the decentralization aspect of the entire system. If you want this kind of system, you’re probably better of taking an SQL database and lobbying your local government for a new financial system, because the system you’re proposing doesn’t fundamentally look different to the existing financial system.