Exploring an issue that continues to spur controversies in the more traditional circles of global finance, a new white paper by international law firm Perkins Coie claims that regulated financial institutions can ensure compliance with anti-money laundering (AML) obligations when supporting privacy tokens.
"This 40-page report is the most comprehensive to-date on compliance and Monero and will greatly assist adoption of XMR!" the team behind the most popular privacy coin reacted.
At pixel time (10:32 UTC), XMR, ranked 19th by market capitalization, trades at USD 91 and is up by 1.4% in a day, while the majority of the top 100 coins are in the red today. The price is also up by 9% in a week, trimming its monthly losses to less than 0.5%. XMR increased by 22% in a year. At the same time, another popular privacy-focused coin, zcash (ZEC) is down by 6.6% today, to USD 58.
Meanwhile, according to the lawyers, "not only do privacy coins provide public benefits that substantially outweigh their risks, existing AML regulations properly and sufficiently cover those risks, providing a proven framework for combating money laundering and related crimes.”
Perkins Coie said its paper also dispels “the misconception that privacy coins are fundamentally incompatible with AML compliance, focusing on measures that have allowed VASPs [virtual asset service providers] to comply with AML obligations when conducting or facilitating privacy coin transactions.”
“Privacy coins reflect a nascent, but important, effort to safeguard our fundamental interest in personal and commercial financial privacy. The AML risks of privacy coins, while real, do not require specific, tailored regulations that may pose an unnecessary risk of stifling privacy coins’ growth,” according to the law firm. “Rather, VASPs can adequately address those AML risks by maintaining an effective, risk-based program. Allowing VASPs to support privacy tokens under current, tested AML regulations strikes the appropriate policy balance between preventing money laundering and allowing beneficial, privacy-preserving technology to develop.”
"The cryptocurrency ecosystem should be embracing privacy and fungibility innovations, not shying away from them. These resources will give virtual asset service providers the confidence they need to support a more complete set of assets while remaining committed to compliance,” Justin Ehrenhofer, Regulatory Compliance Analyst at DV Trading, a US-based trading firm, was quoted as saying in a press release by Tari Labs, one of the contributors of the report. Tari Labs develops a digital asset-focused blockchain protocol.
Meanwhile, the report has attracted varying feedback from the cryptosphere, with some observers calling it a missed opportunity to shift the narrative surrounding bitcoin (BTC) and other cryptocurrencies.
“Disappointed that they decided to amplify the 'privacy coin' meme. 'Privacy-preserving' or 'privacy-enabling cryptocurrencies' should've been used throughout,” wrote a Twitter user.
@monero and not Monero's privacy-preserving technology. To explain to regulators and others that Bitcoin is unlike… https://t.co/PdUM4KTVJr— geonic (@_geonic)
Learn more: As 'Apathy Towards Privacy' Prevails, This Firm Says It Can Track Monero Lobbyist Asks US Regulator to Let Banks Deal In Privacy Coins Bithumb Under Pressure to Delist Monero as Nth Room Ire Continues 'Reports of the Death of Privacy Coins Have Been Greatly Exaggerated'