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The anonymity of cryptocurrencies is a promising feature, but is it a serious problem for governments and regulators?

Among proponents of crypto-assets and cryptocurrencies, anonymity has been seen as one of the most promising features of distributed ledger technology.

At the same time, this issue has been perceived as the most troubling issue for governments and regulators and is becoming a serious review and regulatory response to the blockchain space.

For governments and regulators, anonymity is likely to be a hotbed of fraud and money laundering, a weakness that threatens the global economy and can be a serious threat.

The strength of anonymity depends on the type of cryptocurrency Understanding the role of anonymity with the use of cryptocurrencies should know that there are unique differences in each platform.

Bitcoin (BTC), for example, is quasi-anonymous, and transactions are part of public leisure, and it is difficult but not impossible to track to a specific source. On the other hand, virtual currencies such as Monello (Monero) can make transaction data almost completely undecipherable, attracting user interest.

However, the virtual currency space has evolved like technology, allowing it to reduce and erase its anonymity, at least for some cryptocurrencies.

Companies such as Elliptic and Cyptrace provide criminal scientific tracking services for cryptocurrencies. The anonymity of blockchain assets is a major problem for world government leaders because they could weaken the value of their legal currencies. In a recent example, when Facebook announced its plan to issue its own currency, the upper and lower houses of the United States were keeping a close eye on the issue, said David Marcus, the project’s representative.

Reaffirm that we do not allow the anonymous use of libra.

Virtual currency trading visibility is advancing internationally, demanding strict KYC In the international arena, we are moving in the direction of visualizing the trading of virtual currencies. The Financial Activities Working Group (FATF) of international organizations in 35 countries and regions, including the G7, has created a customer verification (KYC) framework that exchanges should comply with.

The broad personal information obtained here is managed by the appropriate government agencies. The exchange itself is gradually reducing the use of cryptocurrencies anonymously. For example, Binance will soon open an exchange for the United States that requires Americans to have a particularly strict KYC.

Similarly, Coinbase UK has excluded the Zcash (Zcash/ZEC) transaction from registration, which places particular emphasis on anonymity.
Will privacy protection and anonymity develop into international discussions in the future? It will depend on the progress of the situation in the future, how much the movement to question the anonymity of cryptocurrency transactions will increase. The issue of privacy protection remains a priority among cryptocurrency advocates.

Virtual currencies such as The Zec, which have the functionality of the platform itself, do not expect the growth of the user base when anonymity is lost. On the other hand, as regulations are tightened, the adoption and use of virtual currency spaces will become increasingly sensitive to platforms with anonymity, and exchanges that refuse to cooperate with financial authorities may emerge. In contrast, it is possible that regulators will strike a more aggressive way to ensure public visibility of transactions and personal information. The issue of anonymous trading in cryptocurrencies is likely to develop into further international discussions in the future.

Disclaimer - OBN is an informational website which aims to give the latest blockchain related news to the readers. Articles on OBN should not be considered as investment advice. Trading cryptocurrencies is a high-risk investment, every user is advised to consult an expert before making any decisions.