Report: EU May Ban Privacy Coins

A leaked draft of an EU anti-money laundering (AML) bill suggests the organization could prohibit regulated financial institutions from dealing in privacy-enhancing cryptocurrencies such as Monero and Dash.

According to a CoinDesk report on Tuesday (Nov. 15), a draft document seen by the publication stated that “credit institutions, financial institutions and crypto-asset service providers shall be prohibited from keeping […] anonymity-enhancing coins.”

The bill in question was proposed last year by the European Commission as part of a legislative package intended to strengthen the EU’s AML rules, improve the detection of suspicious activities, and close loopholes in current regulations that criminals use to evade the law.

At the heart of the package is a proposal to create a new EU-level AML Authority (AMLA), which will coordinate the efforts of various national authorities to ensure the consistent application of EU rules.

Under the leaked plans, crypto asset brokers would be obliged to verify customers’ identity — even for occasional transactions — of under 1000 euros ($1037) and to probe the nature and purpose of larger payments.

Crypto service providers doing business outside the EU may also need to verify whether their partner is licensed and has sufficient AML controls in place, the report said.

Sometimes known as privacy coins, privacy-enhancing cryptocurrencies use various methods to make their users anonymous and their transactions untraceable. As such, they provide a useful tool to criminals looking to clean their dirty money.

On the other hand, the likes of Monero, Dash, Grin, and Zcash can also serve the legitimate privacy interests of businesses and individuals who want to protect against data breaches.

In the U.S., the cryptocurrency exchange Huobi delisted seven privacy coins in September, saying it wanted to create “a good compliance foundation for the company to carry out digital currency-related business in the United States.”

Read more: US Takes Indirect Aim at Anonymity-Focused Crypto Coins

Although there has been no suggestion that U.S. lawmakers are considering their own ban on privacy-enhancing tokens, the Internal Revenue Service has previously offered bounties for developers working to trace Monero transactions.

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