Is the EU planning a privacy coin ban?

To Information from Coindesk there are efforts in the European Union to draft a new anti-money laundering law. This provides for a general ban on trading in privacy coins. Anonymous payments would therefore only be possible with difficulty. Crypto exchanges in South Korea and Australia are no longer allowed to offer privacy coins. In Japan they are completely forbidden. Europe could soon follow. Networks like Zcash or Monero offer blockchain-based solutions to make anonymous payments online. The EU is apparently planning regulatory steps against it.

What are privacy coins?

Privacy coins have long been under the scrutiny of the financial authorities. But how do they differ from other tokens? In short: They offer the opportunity to transfer money anonymously on the Internet. Other networks, such as Bitcoin, are only pseudonymous. This means that the stocks and transfers of all addresses represented in the network can be viewed publicly and can therefore be traced transparently. However, this cannot be used to verify who owns a specific address.

However, since customers of financial service providers are subject to so-called KYC regulations (“Know Your Customer”), there is still a comparatively high level of transparency. In contrast, privacy coins are technically able to process payments completely anonymously.

Why are privacy coins so controversial?

The debates about privacy coins are part of the complex discourse about online anonymity. Governments and authorities fear that the tokens will be misused by criminals to cover up their business. Back in August, the US Treasury Department banned the Tornado Cash crypto-mixer. This was suspected of having been used to raise money for the North Korean weapons program.

On the other hand, however, it is important to ask to what extent anonymous payments on the Internet should be criminalized at all and how much insight state institutions should be given into the money transactions of their citizens.

Is there now a trade ban for Europe?

“Credit and financial institutions and crypto-asset service providers must not store coins with enhanced anonymity,” says the draft law available to Coindesk. Providers of crypto assets should also be obliged to check the identity of their customers even for occasional transactions of less than 1,000 euros and to examine the purpose of the transaction in the case of larger payments. If the indications of the EU’s efforts to tighten money laundering laws prove true, it would be another setback for network anonymity.