The EU is proposing a ban on privacy coins

The European Commission is considering a proposal that would forbid financial institutions from handling privacy coins, which would make it much harder for people to use these coins anonymously.

A new anti-money-laundering bill is reportedly proposing a ban on privacy coins like Monero, Dash, and Zcash in the European Union. This bill would ban banks, financial institutions, and other companies from keeping any “anonymity-enhancing” coins.

The Czech Republic is proposing a ban on privacy coins that make it difficult or impossible to track cryptocurrency transactions as part of a larger anti-money-laundering (AML) bill. This bill would also create a new EU-wide agency (AMLA) to oversee large financial institutions, ban large cash transfers, and forbid non-crypto privacy-focused financial instruments such as bearer shares and anonymous accounts.

This would require crypto exchanges and other service providers to collect customer identification information even for transactions under €1,000. This is more severe than the requirements for banks and other traditional money services businesses.

The EU would require crypto service providers to vet their non-EU counterparts for licensing and anti-money laundering (AML) controls.

This is an additional restriction that would be placed on crypto exchanges in the agreed-to but not-yet-passed Markets in Crypto-Assets (MiCA) regulatory framework. These exchanges would have to identify users before transferring anonymous assets, and would need to take extra precautions for privacy coins.

The EU decided not to require AML checks on all transactions, regardless of how small, when drafting the MiCA. The regulations imposed that requirement on transactions between crypto-asset service providers, like exchanges, and wallets hosted by them.

Cryptocurrency transactions are different from traditional financial transactions, where anti-money laundering (AML) checks start at €1,000.

U.S. Against Anonymity

The move comes as part of a global effort to crackdown on privacy coins and anonymous services. This includes sanctions against Tornado Cash, which was used by North Korean hackers to launder stolen cryptocurrency.

The Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on computer code, a move that is new and has never been done before. This is important because it means that sanctions can now be placed on things other than people or businesses. Coinbase has offered to back one legal challenge against the US government’s new sanctions against Russia.

The IRS has been funding research into ways to break the anonymity of privacy coins like Bitcoin.

The Treasury Department is looking into requiring people to get KYC checks if they’re using unhosted wallets. This proposal was first made by former Treasury Secretary Steven Mnuchin in 2020, and many people in the crypto industry objected because it would make it much harder to keep your privacy when using cryptocurrency.

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