Dare To Be Better
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Dare To Be Better

The European Union may outlaw anonymous cryptocurrency

The EU may prohibit anonymous cryptocurrency as part of its evaluation of new European anti-money laundering (AML) legislation. Journalists from CoinDesk who have access to drafts of the law reported. In this case, Monero (XMR), Zcash (ZEC), and Dash (DASH) coins will be banned.

According to a diplomatic source of journalists who requested anonymity, such a step is intended to reduce the risk connected with crypto-assets meant to prevent identification. However, this is not an official release, but rather journalistic insight.

“There is certainly a significant need for such a regulation in several EU countries,” he adds.

If the proposed laws are implemented, organizations that provide crypto services would be required to authenticate the identification of customers for transactions as little as 1,000 euros. This is a much stricter regulation than what European banks are subject to. EU politicians are concerned that cryptocurrency transactions can be easily fractured.

Non-crypto companies must verify if their counterparties are licensed and what money laundering measures they employ. The law must be approved by the EU Council and the European Parliament before it can go into force.

Financial regulators have long been concerned about anonymous cryptocurrencies. But what distinguishes them from other tokens?

Anonymous crypto-coins are a type of cryptocurrency that enforces private and anonymous blockchain transactions by concealing the origin and destination of the transaction. In these terms, bitcoin is partially anonymous, since we can trace the transaction on the blockchain.

Usually, anonymous cryptos employ a range of methods to preserve their anonymity and confidentiality, the most common of which include stealth addresses, ring signatures, CoinJoin, and zk-SNARK.

According to Europol research, the usage of cryptocurrency in criminal activities is increasing. However, as compared to fiat and other transactions, the overall quantity and value of cryptocurrency transactions tied to illegal activities represent a small percentage of the illicit economy.

Previously the EU passed the Markets in Crypto Assets Regulation (MiCA), but the law has yet to enter into force. It forbids exchanges from transacting with anonymous crypto assets whose holders have avoided the KYC procedure. The agreement was revised in a vote for MiCA to restrict trading with PoW cryptos. However, the plan was rejected by the European Parliament’s Economic and Monetary Affairs Committee.

The Belgian financial regulator has determined that cryptocurrencies created only through computer code are not securities. The explanation was provided by the Belgian Financial Services and Markets Authority (FSMA) in a November 22 report.

Although FSMA is not legally enforceable under Belgian or European Union law, it has said that cryptocurrencies would be classified as securities if issued by an individual or entity under its “stepwise plan”.

To conclude, authorities’ pursuit of anonymity has accelerated in recent years. This is true for cryptocurrencies as well as the traditional financial industry. This may irritate some cryptocurrency enthusiasts since it opposes part of the concept that cryptocurrencies should be decentralized and anonymous. For the moment, we may assume that crypto regulation will only become more stringent shortly.

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