European Union takes a stand against Monero (XMR)
European Union takes a stand against Monero (XMR)

European Union takes a stand against Monero (XMR)

By Andrea Porcelli - 21 Nov 2022

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It seems that the European Union is moving to ban privacy coins such as Monero (XMR), Dash (DASH) and Zcash (ZEC).

Monero, Zcash and Dash at risk: here’s why

From a document leaked by anonymous sources, it has been revealed that the European Parliament is working on an anti-money laundering policy proposal. The aim of the proposal is to ban banks and cryptocurrency providers from interacting with the privacy coins. 

The news was revealed by an anonymous diplomat who disclosed it to a crypto world news distribution platform.

The proposal clearly has yet to be made official, but a draft of the bill has already been drafted by Czech officials and shared by the 26 member states. On 9 November the EU body stated:

“Lenders, financial institutions and crypto-asset service providers are prohibited from maintaining … coins that enhance anonymity.”

In the event this policy reform is implemented, which sees a ban on interaction with cryptocurrencies for privacy, intensifying restrictions against crypto anonymity, many of the most popular cryptocurrencies will be blacklisted. Among them we see well-known cryptocurrencies including Monero (XMR), Zcash (ZEC) and Dash (DASH).

What are privacy coins like Monero?

When we talk about privacy coins, we mean coins used by people who want to hide their transactions for some reason. And we are not talking about criminals in the industry, but simply people trying to appeal to one of the basic rights: privacy.

Privacy coins are equal and fungible by default. Although they use a public blockchain network, they are able to obscure the identity of the participant and transaction amounts. Funds transfers, therefore, become untraceable.

In addition, privacy coins have fewer transaction fees, higher speeds and some of them are more environmentally friendly than Bitcoin. Among the best-known are Zcash, Dash, and Monero. 

The EU and its plan to exclude decentralized projects

The European Parliament is really intent on revolutionizing regulations in the old continent’s crypto ecosystem. On 6 October 2022, lawmakers in the Parliament voted in favor of new tracking regulations for Bitcoin and other cryptocurrencies. The new regulations would require crypto companies to collect and store information about who is involved in cryptocurrency transfers.

In response, 46 European industry leaders and organizations from the crypto sphere said in a letter that the new regulations will be detrimental to any owner of digital assets, also reducing, the privacy and security of cryptocurrency holders. 

One of the EU’s new proposals is precisely to exclude decentralized projects, which include decentralized finance or “DeFi” from the requirements to register as legal entities. 

The CEO of CoinShares Jean-Marie Mognetti, who organized the drafting of the letter, said that Europe currently has more complex crypto regulations than other regions, which discourages companies from pursuing a growth path in Europe.

Diana Biggs, Chief Security Officer of DeFi Technologies, added that she is eager to increase the influence of the European cryptographic industry on policymaking in Brussels:

“There have not been strong enough or coordinated efforts in our sector in Europe.” 

The European Union has already blocked all crypto transactions from Russia

Not only did the European Union last month move to seek new regulations in the crypto sector, it introduced another set of sanctions against Russia

These sanctions include a complete ban on crypto payments between Russia and the European Union, including all crypto wallets, accounts and any cryptocurrency custody services, regardless of the amount of the wallet.

Previously, a limit of €10,000 had been imposed on transfers between Russia and the EU. Now, however, the limit has intensified and it is no longer possible to move money from European to Russian wallets. 

The EU’s goal is to further deprive Russia’s military and industrial complex of key components and technologies in the face of Russia’s recent nuclear threats to Europe. 

Russia unlike Europe, has gone from being very restrictive towards the crypto sector, to instead being very open. Indeed, it is itself developing its own version of the digital ruble, ready to improve communication in its relationship with China.

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