US Lawyers Confirm Monero and Other Privacy Currencies Can Coexist with AML Laws
An international law firm finally explained whether privacy coins can coexist with anti-money laundering (AML) laws or not. In a report On AMD regulation and privacy coins published yesterday, the US law firm Perkins Coie confirmed that projects like Monero (XMR) do not conflict with AML laws. In the report, Perkins Coie argues that centralized entities can support privacy currencies while still tracking AML compliance.
The report further states that privacy coins and tokens "do not offer incremental challenges or requirements" for regulatory entities or companies. Perkins Coie specifically states that Virtual Asset Service Providers (VASP) should only follow existing regulatory guidelines.
These include the collection and transfer of information about transactions and customers. Also, the US law firm states that this is not a special requirement. Traditional financial institutions follow the same guidelines and VASPs must follow the same standard.
Elsewhere in the report, the law firm confirms the limited role of VASPs if they are used as custodians of wallets. With access to the number and types of privacy coins, VASPs can follow regulatory guidelines by reporting any malicious activity.
This can be done in a decentralized way by using privacy protocols such as Monero. Due to the nature of Monero, VASPs may disclose certain information to third parties without revealing the identity of the wallet holder.
The law firm emphasized this point by stating:
“This allows users and the VASP to disclose certain transaction details associated with a given account to a third party without publicly disclosing that user's transactional information. Additionally, VASPs may require disclosures in advance as part of their registration process and on an ongoing basis to meet their obligations.
Focus on privacy or tracking criminal activity?
Another key focus is placed on financial privacy, not only in the cryptocurrency ecosystem, but also in legacy. An excerpt from the report says:
“Businesses depend on and expect financial privacy. Without maintaining confidentiality, business transactions would be visible for competitors and nefarious actors to analyze, forecast, carry out and exploit. This kind of radically transparent environment would likely result in market manipulation by participants, an obstacle to innovation, and an unfair advantage to competitors and counterparties alike. '
The report entertained parts of the crypto community as the IRS recently announced a reward by Monero. The US tax agency announced a reward of $ 625,000 for Monero. The agency did not specifically state what "breaking Monero" entails. However, we believe that the IRS may seek to dismantle the protocol's functions of hiding personal data.
A joint report recently pointed to a possible increase in regulatory pressure. International management consultancy BCG Platinion and Crypto.com worked together on the document to explain the danger ahead. The report revealed that the rapid growth of DeFi in 2020 may lead to regulatory agencies marking the sector as a "money laundering haven."
If DeFi follows the expansion of ICOs in 2017, we may also see a regulatory hunt down the road. For now, decentralized platforms and protocols are free to use. How long it will last can be revealed as early as next year.
If you found this article interesting, here you can find more news about Blockchain and cryptocurrencies