An academic paper published in the Journal of Cybersecurity has proposed that governments consider targeting public blockchains, especially those focused on privacy, as part of efforts to fight money laundering.
The paper, titled “Reconciliation of Anti-Money Laundering Instruments and European Data Protection Requirements in Permissionless Blockchain Spaces,” outlines several strategies for undermining trust in permissionless blockchains. Some of the methods mentioned include launching 51% attacks, price manipulation, and Sybil attacks, where a single user creates multiple fake accounts to disrupt a network. According to the author, these tactics could weaken users’ confidence in the security and stability of these networks.
However, the author stresses that such aggressive measures should be considered only as a “last resort,” after other options like blacklisting certain wallet addresses, flagging suspicious transactions, imposing sanctions, and implementing regulatory controls have been thoroughly explored. The goal, the paper argues, should be to strike a balance between enforcing anti-money laundering laws, promoting blockchain innovation, and protecting individual privacy.
Though the paper was originally published in 2021, its recommendations have gained renewed attention following recent speculation that some of the tactics mentioned in the research could already be affecting the price of Monero (XMR), a privacy–focused cryptocurrency highlighted in the study.
In line with these developments, crypto exchange Kraken recently delisted Monero in the European Economic Area to comply with EU regulations aimed at controlling money laundering and illegal activities tied to anonymous cryptocurrencies.
This paper and the surrounding discussions raise important questions about the future of blockchain privacy, government intervention, and the regulatory frameworks shaping the crypto landscape.
Summary Review: The academic paper brings attention to the tension between regulatory efforts to combat money laundering and the privacy features of certain cryptocurrencies. While the author suggests extreme measures like 51% attacks and price manipulation as potential tools for governments, the paper advocates for using these tactics only after other policy solutions have been exhausted. The renewed focus on these ideas, especially in light of Monero’s recent delisting by Kraken in the European Economic Area, highlights the ongoing challenges in balancing financial regulations with privacy protections in the evolving world of cryptocurrency.
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