Lightspark, a Lightning Network (LN) financial services company, has announced it has open-sourced Universal Money Address (UMA), a protocol similar to email, but for money. The protocol will be interoperable, allowing platforms to exercise due compliance on the transactions facilitated, an inclusion criticized by the Bitcoin community on social media.
Lightspark Opens UMA Protocol
Lightspark, a Lightning Network (LN) service provider focused on institutions, has announced it is open-sourcing code of Universal Money Address (UMA), a protocol that resembles email but for money. According to Lightspark, UMA allows each user of a wallet, exchange, or bank to have a unique, human-readable address to receive and send money in the form of the currency of their choice.
Lightspark states UMA presents several benefits compared to other money-transmitting protocols: it is available 24/7, with interoperable addresses, and offers low fees for currency conversion and transactions due to its usage of LN in the background. Also, it’s open-source and can be implemented by different companies and wallet providers freely.
UMA allows institutions to exercise due compliance, with its official page advertising that it “enables companies to provide global, fast, and compliant transactions while leveraging existing infrastructure.”
The Compliance Issue
The mention of the “compliant transactions” issue gave origin to a debate in the community, with many criticizing the idea of introducing compliance at a protocol level. David Marcus, co-founder and CEO of Lightspark, stressed the necessity of compliance for the growth of LN.
Marcus, who has profiled LN as a global payments network before, railed against this faction that believes anything that includes the word compliance is “blasphemy.” He stated:
If we truly want Bitcoin and Lightning to become the winning global settlement network for value on the internet, it must enable regulated entities to participate with the network and meet their compliance obligations.
Many disagreed with Marcus’ vision, stressing that compliance was not compatible with the Bitcoin ethos of freedom. Matt Ahlborg, a market research consultant at Bitrefill, declared:
Compliance often means racism when you are required to block hundreds of millions of people based of the country they were born in. KYC/AML [Know Your Customer/Anti-Money Laundering] as it currently exists is un-american guilty until proven innocent system.
Marcus clarified that UMA was backward compatible with LN-URL and that any wallet implementing the protocol, even without complying with KYC/AML measures, could leverage UMA to make and receive transactions.
What do you think about UMA and its supposed benefits? Tell us in the comments section below.
