Why privacy laws will not impact cryptocurrency (mostly)

Published in El Pais, 13 April 2022.

The EU has given cryptocurrency a few scares recently. First was the law that required proof of work blockchains, the act of mining cryptocurrency with computers, to use more environmentally friendly resources, and now the Know Your Client law (KYC) which basically outlaw privacy transactions. While the later failed to pass this new one has some crypto enthusiasts worried but the reality is if passed, such a law would have limited impact on the crypto world.

For one, almost all fiat to crypto exchanges has some sort of KYC rules which require you to upload an ID, a selfie and a proof of address meaning for many the only way to buy or sell crypto for cash is to reveal who you are. If I am a criminal and I take Bitcoin as payment, it does not help me much if I must cash out through a regulated institution.

Two, there is a common myth that cryptocurrency is entirely private when the reality for most coins is that the opposite is true. If I post my Ethereum address here (I won’t) you will be able to look it up on a blockchain scanner and not only see my balance of every token that I have but also every transaction that I have ever made, while my name will not be associated with it I would not think an entirely visible wallet would be an ideal place to conduct illegal activity.

There are of course some cryptocurrencies that are completely private, Monero for instance has all transactions private and attempting to look up an address on a scanner will result in a warning that it is not possible, meaning the law may have some impact, but blockchain and crypto enthusiast need not worry regardless of whether this law passes or not. Blockchain and crypto is not going anywhere.

About Matthew Glezos 420 Articles
Matthew is Canadian and has a Master in Business Administration. He has international experience in marketing and strategy. He has a strong interest in technology and combines it with the business side.

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