Is the EU Considering a Ban on Privacy Currencies?
The EU apparently wants to crack down harder on privacy coins and anonymous payments in the crypto sector.
The EU seems set to take a tougher stance against privacy coins and anonymized payments in the crypto sector. According to Coindesk, the European Union is working on a new anti-money-laundering law. The law discusses a ban on the trading of privacy currencies. Anonymous transactions would thus become (almost) impossible.
In South Korea and Australia, crypto exchanges already may not offer privacy coins, and the Dutch central bank (DNB) is against offering privacy coins. In Japan, they’re even completely banned. Europe wants to quickly follow Japan’s example. Networks like Zcash or Monero offer anonymous payments on the blockchain. The EU wants to quickly ban these networks.
What are privacy coins?
Privacy coins have been under close watch by financial authorities for some time. But how do they differ from other crypto? Privacy currencies give you the ability to move money anonymously on the network. Other networks, like Bitcoin, are only pseudonymous. That means ownership and transfers of all addresses on the network are publicly visible and traceable, but it’s not clear who owns a given address.
Because customers of financial services are subject to KYC regulations, there’s a relatively high level of transparency. Privacy coins traded wallet-to-wallet, on the other hand, can technically process payments completely anonymously.
Why are privacy coins so controversial?
Debates about privacy coins are part of the broader discussion on network anonymity. Governments and authorities worry criminals could use the tokens to hide their activities. In August, the U.S. Treasury Department banned the crypto mixer Tornado Cash, which was suspected of facilitating money laundering for North Korea.
On the other hand, some people question how much secrecy online payments should actually be illegal and how much visibility government agencies should have into their citizens’ financial transactions.
Is there now a trading ban on privacy coins in Europe?
"Credit and financial institutions and providers of crypto-asset services may not hold coins with enhanced anonymity," the bill draft reviewed by Coindesk states. Crypto brokers would also have to verify their customers’ identities, even for smaller transactions under 1,000 euros.
