You may have heard the myth that “Miners are financial intermediaries.”
In the context of regulation this essentially means “an entity that can manage or control a transaction.”
Because the entity can control a transaction, they are required to meet specific regulations to provide basic consumer protection. These regulations are too large of a burden for individuals to manage and as a result if miners were financial intermediaries it would mean only large corporations would end up owning the network.
In cryptocurrency networks, you create a transaction by signing the action you want to take with your private key and broadcasting that to the network. Miners then process that transaction.
While a miner can see the transaction contents, they aren’t able to modify your transaction.
Many people think of miners as a large corporate enterprises, and while some are, lots of miners are collectives of individuals each running the mining software.
In regulation surrounding “financial intermediaries” we make an important distinction between financial intermediaries and the infrastructure used to access them. The important concept here is the root of the word (in English) which is “to mediate” or “to intervene in the middle of an action.”
For example, logging into your bank account online to send money to another person, the bank is acting as a financial intermediary. They have the right to intermediate on the transaction. They can block it, change it, reverse it, etc. However, your internet service provider, who you still require in order to access the online banking is not a financial intermediary. While they still transmit your bank transaction across the internet, regulations recognize that they do not have the ability or authority to intermediate on the transaction.
That’s why current Money Transmitter laws including the New York “Bitlicense” specifically exempt internet service providers from being deemed ‘financial intermediaries.’
Miners in a blockchain ecosystem are much the same. They transmit and process the transaction, but, they do not have the ability to intermediate upon the transaction. Not unless thousands of independent miners around the world suddenly colluded to do so, which would have an economic downside to them.
In short, this myth simply isn’t true.
Miners are not financial intermediaries and should not be regulated as such.