The ability to operate anonymously is a central tenet of crypto technology. How anonymous is cryptocurrency now? Well, not so much.
Cryptocurrencies were born to bring us freedom and anonymity, right? But as crypto is going more and more public, the global perspective is changing. Authorities are striving for legislation that would allow them to oversee crypto market and would deprive us – users of crypto – the anonymity we have been praising.
Future of the crypto was a long time seen as a safe, anonymous, fast, and conventional financial instrument.
But there is a problem with digital assets’ perception. More and more stories emerge about crypto as a fraud tool for financing international terrorism.
As a result, anonymity is being quietly withdrawn from crypto market. Now you have to verify your identity while registering on the most popular crypto exchanges.
Of course, your transactions are still considered anonymous. But this could also change in the nearest future.
And while most of the recent crypto legislation initiatives came from the US, it seems that European Union wants to lead this process and define how anonymous cryptocurrency should be.
At least some European politicians clearly want to end with crypto anonymity.
Is EU destroying cryptocurrency anonymity?
Members of the European Parliament reportedly will vote to end the anonymity of crypto payments. In all kinds of transactions including small ones.
The voting should take place at Economic Affairs Committee meeting at the beginning of April.
The Committee’s lawmakers want to add anti-money laundering check-ups for crypto transfers with self-hosted or private wallets. Officials also tend to halt crypto transfers between the EU and countries like Turkey and Hong Kong.
The current EU laws oblige to identify users of any bank transfer over 1000 euros. According to some sources, this limit can be decreased. And requirements for transaction identifying might be extended to crypto assets.
Internal parliament documents suggest lawmakers will also tell crypto service providers to refrain from making or aiding any transfers deemed at high risk of money laundering or crime, Coindesk reports.
That will in practice make it harder, or perhaps impossible, to make transfers from the EU to anywhere deemed by the bloc as a tax haven.
Lawmakers also want to extend the measures to include privately held crypto assets, in spite of uncertainty over how transactions between unhosted wallets could be enforced.
The measure should help to combat smurfing, which is the practice of dividing large transactions into smaller ones.
And yes, European anti-money laundering officials are afraid of crypto being used for terrorism funding, child abuse, etc.
If the new regulation norm will be passed any size of crypto payments would require identity checks.
How anonymous is cryptocurrency after all?
First of all, some countries, including the U.S. and U.K. Virgin Islands, Turkey, Russia, Hong Kong, Iran, the Cayman Islands, and others are seen as significant sources of dirty money.
Crypto is often seen as a perfect instrument for criminals.
Secondly, the changing world agenda makes the crypto impact more powerful today. Countries that playing along with Russia can use crypto to help aggressors avoid West sanctions.
Moreover, there is a crypto boom in Russia because people want to withdraw their savings. Having no access to US Dollar or other stable fiat currencies, they turn their heads towards crypto assets.
All the largest crypto trading platforms have already started to block Russian accounts. So Russians are desperately trying to use less known platforms or private wallets to buy Bitcoin, Tether and other cryptocurrencies and keep them safe.
For example, Coinbase announced blocking 25 000 cryptocurrency addresses linked to Russian people or entities because of war in Ukraine.
Coinbase chief legal officer Paul Grewal mentioned that transactions are “traceable, permanent, and public” for cracking down on illicit accounts and activities.
So this is a time for de-anonymizing to work at full scale, European politician say.
Sources: Coindesk
