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The European Union is taking a tougher stance against privacy tokens and cryptocurrency mixers, with a bombshell report accusing them of facilitating illegal activity and warning them to be heavily regulated at the risk of alienating the decentralized crypto community.
The EU is considering regulating privacy tokens!
In its first-ever report on encryption, the EU Innovation Hub is scrutinizing techniques to conceal cryptocurrency transactions. The consortium, set up by several institutions including Europol and Eurojust, is concerned about the risks such tools pose to financial traceability and anti-money laundering measures.
The report specifically names certain privacy cryptocurrencies, including Monero, Zcash, Grin and Dash, whose encryption protocols are said to make transactions completely opaque, complicating law enforcement surveillance efforts.
Recent innovations such as MimbleWimble and zero-knowledge proofs have been criticized for their ability to hide addresses, balances and transaction flows.
Targeted Cryptocurrency Mixers
However, it is the “mixing” services that have attracted the most criticism: these platforms muddy the waters by mixing different crypto assets of different origins, posing a threat to tracing illicit funds, according to the EU.These tools have complicated tracking for years.” and cites Tornado Cash as an example.
The EU recognizes that anonymous transactions can be traced if the private keys are known, but seems determined to better regulate this opaque side of the crypto ecosystem. This tough stance comes after Tornado Cash developers were convicted of money laundering, despite the non-custodial nature of the protocol.
Regulators must find the right balance between the privacy protections that the reports warrant and their ability to uncover illicit financial flows.
New, stricter rules on confidentiality protocols and mixing services are on the horizon and risk clashing with the fundamental principles of cryptocurrency.
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Passionate about Bitcoin, I love exploring the world of blockchain and cryptocurrencies and sharing what I discover with the community. My dream is to live in a world where private life and financial freedom are guaranteed for everyone, and I believe Bitcoin is the tool that will make this possible.
Disclaimer
The views, thoughts and opinions expressed in this article are those of the author and should not be taken as investment advice. Please conduct your own research before making any investment decisions.
