By
Temitope Olatunji
May 13th, 2024
The EU legislators want to avoid the risk associated with crypto assets that mask the senders’ and recipients’ information.
The European Union is reportedly preparing a draft bill to ban privacy-oriented crypto coins like Monero (XMR) and Dash (DASH) from accessing its market. The EU has raised concerns over money laundering cases enabled by privacy-oriented coins. As such, the Czech officials, who are chairing talks among EU governments on the proposed law, want tougher regulations implemented on the cryptocurrency market.
More so now that the crypto market has sustained long bearish sentiment fueled by the Terra Luna, FTX, and Alameda collapse. The EU member states, which have over 500 million people, are an active market for international tech companies seeking to expand their needs.
As more institutional investors diversify their assets to the cryptocurrency market, the likelihood of adopting privacy-oriented coins cannot be ignored. Moreover, Monero (XMR) has a market capitalization of over $2.3 billion and a daily traded volume of approximately $109 million.
“Credit institutions, financial institutions and crypto-asset service providers shall be prohibited from keeping …anonymity-enhancing coins,” the bill reads.
Reportedly, The EU legislators want to avoid the risk associated with crypto assets that mask the senders’ and recipients’ information.
EU on Privacy-oriented Crypto Coins
Under the EU proposed draft bill to ban privacy-oriented coins, licensed crypto firms would be obliged to verify customers’ identity even for occasional transactions of under 1,000 euros. Additionally, the crypto firms would be obligated to probe the nature and purpose of the business for larger payments.
Notably, the proposal noted that crypto service providers doing business outside the EU would need to verify whether their counterparty is licensed, and verify what money laundering controls they have.
European regulators are also keen on money laundering activities taking place under the pretense of NFTs. Moreover, a lot of wash trading has been reported in the nonfungible tokens industry for the last few years.
While the EU lawmakers push to end the use of privacy-oriented coins, the lapse in other jurisdictions is expected to slow down the process. Moreover, there are counties with almost zero crypto assets regulations, hence making it difficult for countries that have already drafted the regulations.
Notably, due to geopolitical differences, the cryptocurrency industry cannot be regulated in a similar way in all countries. Furthermore, some countries are adopting crypto assets as legal tender while others fight for ways to control the technology.
The future of privacy-oriented crypto assets is bleak, more so now that confidence in the industry has significantly been crushed by the FTX and Alameda case. Nonetheless, nothing would prevent cyber criminals from developing a private blockchain and using a privacy-centric coin for transactions.