It's possible that the European Union may intensify its regulation efforts in the area of privacy.
Main Points
- According to rumors, the European Union intends to limit or outright prohibit the usage of privacy currencies within its borders.
- The prospective ban appears to be motivated mostly by concerns over money laundering.
- The need for privacy-preserving cryptocurrencies is growing stronger as on-chain monitoring technology advances and lawmakers on both sides of the Atlantic become more watchful.
According to reports, the European Union is considering a ban on privacy cryptocurrencies like Dash(DASH), Zcash(ZEC) and Monero (XMR), amongst others.
Draft Document
An unidentified EU official allegedly revealed the intentions to CoinDesk that parliamentarians are drafting an anti-money laundering policy proposal that would forbid banks and crypto service providers from dealing with privacy coin providers.
If implemented, the rule will essentially ban a number of well-known cryptocurrencies, such as Dash, Zcash and Monero.
The European Parliament submitted legislation in March to restrict exchange-to-unhosted wallet transfers. The parliament now appears ready to tighten regulations on crypto anonymity.
The authority said that "credit institutions, financial institutions and crypto-asset service providers should be barred from keeping anonymity-enhancing currencies" in a draft of the legislative proposal dated November 9, which was first published by CoinDesk.
The 26 member nations have since received copies of the document, which is said to have been written by Czech government representatives. The measure that violates privacy has not yet received formal approval.
Privacy At Risk?
Crypto experts talked with Zcash CEO Josh Swihart earlier this month to get a behind-the-scenes look at the difficulties and possibilities facing the privacy currency industry. Public blockchains pose a significant security risk to both businesses and individual users, according to Swihart.
"I can't afford to let my rivals access all of that [personal] information," said Swihart. "If I'm a firm taking bitcoin directly, not through a third-party middleman, I can't afford to do that." "Not only the data about my company - what's coming in and going out - but also the data about my clients, who can be doing business with me online or through bitcoin. I thus anticipate a tipping point where there will be an abundance of demand.
Swihart predicts that as "today you have all kinds of crypto surveillance businesses, Chainalysis and others, that are not just watching transactions in order to look at flows, but they tag addresses," the demand for privacy coins will become urgent.
Regulators and sophisticated on-chain surveillance may stimulate a rise in the demand for privacy currencies. Instead of banning privacy coins, regulators may promote them.
That is a lesson that US regulators may find useful as well. One such instance is the recent blacklisting of Tornado Cash by the Office of Foreign Assets Control (OFAC) of the US Treasury Department.
According to Swihart, there is "reasonable anxiety" about the route that regulatory discussions have taken. "I believe that what OFAC did was a significant overreach."
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