Written by 8:24 am European Union

The European Union is considering banning privacy coins

The European Union has targeted privacy coins and might issue a ban that would prevent banks from dealing with such cryptocurrencies.
 

 

Cryptocurrencies that aim to enhance user privacy and support anonymous means of payments could be forbidden as a result of new European AML rules according to a draft of a money laundering bill from Czech officials that ended up at CoinDesk. The document states that credit institutions, financial institutions, and crypto-asset service providers would all be affected by the new rules. 

Moreover, crypto asset providers would have to verify the identities of customers for transactions under USD 1,040 (EUR 1,000) while larger payments would incur further verification. Entities that operate outside the bloc would have to verify if their counterparties are licensed and see what kind of money laundering controls they employ. 

According to EU officials cited by CoinDesk, the new measures aim to minimise the risks that come with crypto assets specifically designed to avoid traceability. Examples of such privacy coins include zcash, monero, and dash. In order to pass into law, the bill must be agreed by both the Council and the European Parliament.

 

The European Union has targeted privacy coins and might issue a ban that would prevent banks from dealing with such cryptocurrencies.

 

Europol’s take on privacy coins 

According to a report published by Europol, the use of cryptocurrency as part of criminal schemes is increasing and the uptake of this payment medium is increasing. However, the overall number and value of cryptocurrency transactions related to criminal activities represent a limited share of the criminal economy when compared to cash and other transactions. 

The report lists monero as an important privacy coin and explains how it can enable anonymous transactions by hiding both sending and receiving addresses as well as the amounts of transactions using different techniques and technologies. Dash and zcash are also mentioned in the report as examples of commonly used privacy coins. As far as their popularity is concerned, Europol states that one reason behind the loss of traction of privacy coins is that they’re not as liquid as bitcoin and other cryptocurrencies. 

The report also touches on criminal activity and explains how criminals increasingly add steps to their laundering processes and use unlicensed exchanges. These exchanges often impose light KYC requirements and allow illicit cryptocurrency trades by exchanging funds across various markets. Some exchanges have been accused of facilitating money laundering activities and illicit transactions using fake and stolen identities. 

In January 2021, Europol has taken down the DarkMarket website following a probe by German investigators with the assistance of seven other nations. A 34-year-old Australian man accused of running the dark web marketplace was arrested by German authorities close to the Danish border. The illegal site had processed more than 320,000 transactions, had close to 500,000 users and over 2,400 vendors.

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