The academic paper titled “Harmonizing Anti-Money Laundering Tools and European Data Protection Requirements in the Permissionless Blockchain Space” was published in the following academic journals: Cybersecurity Journal They suggest that governments should target cryptocurrencies, especially their privacy chains, to combat money laundering.
The paper’s authors describe several ways to undermine trust in permissionless blockchains, including 51% attacks, price suppression, and Sybil attacks, a type of malicious activity where a single user creates multiple accounts to manipulate the network. I did it. The author argued:
“A successful attack on the network could significantly undermine users’ trust in the network, which could undermine the blockchain community’s confidence in the ability of the network protocol to ensure smooth operation.”
However, the paper also argued that these methods should only be used as a “last resort” to prevent money laundering after other policy initiatives such as wallet address blacklisting, transaction marking, sanctions and other regulations have been exhausted.
Ultimately, the authors conclude, any approach should seek to balance the need to ensure regulatory compliance with existing laws, foster innovation, and protect individual user privacy.
Source: Untraceable.
Although the paper was published in 2021, it was recently published after several users theorized that some of the same tactics discussed were currently being used to manipulate the price of Monero (XMR), the privacy-enhanced cryptocurrency named in the academic paper. The results attracted even more attention. .
relevant: Kraken discontinues support for Monero in the European Economic Area
Money laundering: just an excuse for tighter controls?
In 2022, United Nations officials revealed that terrorist organizations primarily use cash to finance their illicit activities. This claim was later corroborated by a report from the US Treasury that criminal organizations prefer fiat currencies over cryptocurrencies.
Moreover, a May 2024 US Treasury report acknowledged that even when digital assets are used for illicit activities, they tend to be used to perpetuate older schemes that could have been perpetrated using cash or other asset classes.
That hasn’t stopped the U.S. government from cracking down on crypto mixers and other privacy-enhancing tools. On September 26, 2024, a U.S. judge ruled that the lawsuit against Tornado Cash co-founder Roman Storm can proceed.
The government’s crackdown on these privacy tools has sparked debate about the viability of these services, as many users ask whether cryptocurrency mixers can survive under the current regulatory regime.
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