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Privacy-Enhancing Crypto Coins Could Be Banned Under Leaked EU Plans

BlockNews Team by BlockNews Team
November 20, 2022
in Breaking News, Crypto, Media, Politics
Blockchain
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According to government-proposed changes to anti-money laundering regulations, cryptocurrency providers would be prohibited from working with coins like dash or monero.

Leaked Draft

According to a leaked money laundering regulation draft, the European Union may forbid banks and cryptocurrency service providers from trading in coins that enhance privacy, such as cash, monero, and dash.

Following strict new regulations agreed upon over the summer, the plans from Czech authorities, leading discussions among EU nations on the proposed bill, would be the latest blow to anonymous payment methods.

Diplomats’ Comment on the Leaked Draft

A legislative draft sent to the other 26 members of the bloc for feedback said, “Credit institutions, financial institutions, and crypto-asset service providers shall be barred from keeping anonymity-enhancing coins.”

According to an EU diplomat, the regulation implemented to lessen the risk associated with digital assets was created to avoid traceability. The ban on privacy coins, which stop blockchain activity from being eavesdropped on, is intended to ban anonymous financial instruments like bearer shares and anonymous accounts initially suggested as a part of the bill.

As the discussions were taking place behind closed doors, the diplomat spoke on the condition of anonymity. He claimed that the Czech suggestion was in response to the countries drafting the text. Plans in the Czech Republic call for crypto asset providers to inquire about the nature and purpose of the business for larger payments and to validate customers’ identities even for lesser amounts of less than 1,000 euros ($1,040). Because of worries that bitcoin payments could be divided easily into smaller bits, due diligence laws would be stricter than the other business types, like banks, which only apply to more outstanding payments.

Proposed Regulations

In the draft, large cash transactions were suggested to be banned, and a new anti-money laundering agency (AMLA) was created to oversee operations at financial institutions. The document also included a proposal requiring cryptocurrency service providers doing business outside the EU to confirm that their counterparty is licensed and has money laundering controls, with specifics of the vetting to be outlined by AMLA.

The processing of dirty money through the metaverse, decentralized finance, and non-fungible tokens are the main topics of the European Parliament’s parallel amendments to the bill (NFTs). For the legislation to become a law, it requires approval from the Council and the European Parliament. If true, it would be the most recent instance of a regulatory assault on online anonymity, which authorities fear may be used to handle illicit funds, violate sanctions, or finance terrorists and other outcasts even when it serves legitimate purposes.

Purpose of the Proposed Regulation

The U.S. Treasury placed sanctions on Tornado Cash in August after its alleged use of raising funds for North Korea’s missile development. Tornado Cash is an Ethereum-based anonymity business. It was the first time the sanctioning authority had singled out a decentralized system.

Conclusion

The EU’s Markets in Crypto Assets Regulation (MiCA), which was approved but has yet to be in effect, prohibits exchanges from permitting the trading of anonymous crypto assets unless they have identified the holders. Anyone handling digital currencies like dash or monero must comply with additional checks imposed by a separate set of regulations on the transfer of funds.

Tags: cryptoCrypto RegulationDashEUMonero
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