EU puts EU-based privacy coin users in untenable position

Draconian anti-privacy regulations

cryptotimes.io reports on the new anti-money laundering (AML) legislation in the EU:

The new regulations place restrictions on the use of cash. Any cash payment exceeding €10,000 will be restricted, and any anonymous cash transaction over €3,000 will be forbidden. Payments with cryptocurrency made with anonymous wallets are prohibited as well.

From a page linked from the article:

a Regulation on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing (the “EU Single Rulebook”) and the sixth (6th) Anti-Money Laundering Directive (“AMLD6”).

Privacy and cryptocurrency enthusiasts are rightfully outraged.

One point the latter - especially EU-based Monero supporters active on social media such as X - are still missing is that the regulations, once formalized in "laws" will make their advocacy untenable.

Of course that I feel bad for them and other non-criminal users affected by these changes even though I don't hold any privacy coins including Monero.

That aside, they are still missing the fact that the regulations put them in an untenable position.

Untenable position

If you're an active Monero user who uses MNR, you now must report transaction details to the government.

If you do that, what kind of privacy coin is that? It's arguably no different from custodial USDT or fiat checking accounts!

Promoting Monero while dutifully reporting all transactions and identifying parties in incoming or outgoing transactions would be terribly wrong.

But, since you're active on traditional social media, that makes you a high profile target for "routine" checks and possibly heavy fines. Because of that not reporting your transactions becomes very risky for anyone active on centralized social media.

That is what makes the situation of Monero users active in social media untenable. Their choices are becoming very limited.

EU residents who continue Monero advocacy on centralized social media have two choices:

• inform the government about their Monero transactions
• not use Monero at all

Those who continue using Monero and do not plan reporting their transactions will be at risk and likely disappear from centralized social media to lower their risk profile.

One group that won't be at risk is Monero speculators and traders, but we don't need to consider this group as the number of centralized exchanges with Monero pairs in the EU is very limited (and declining) and at the same time using a decentralized exchange for trading and speculation automatically makes one a person who uses anonymous crypto transactions and likely well over the limit.

Criminals are the group that will be least affected, that much is sure.

xx coin is unaffected

David Chaum's idea to not make xx coin a privacy coin was very smart.

I must admit initially I wanted more privacy features for xx coin, but in hindsight the man knew what he was doing!

xx Network and xx chain protect privacy of messages which helps crypto and Web3 users make their transactions and applications much more private, but the coin that runs xx chain is not a privacy coin.

This lower exposure to legislative risks makes it easier for the xx Network community to grow and the coin doesn't even need to be widely used for payments.

Staking - available today - allow nominators to get a return on staked coins.

The first, still missing piece, is work-in-progress: xx coin on decentralized exchanges. Today wrapped xx coin is available on XRPL, but there is work in progress on EVM bridge which will make it possible to trade xx coin on decentralized cryptocurrency exchanges.

Eventually xx coin will be used to pay postage (xxPostage) for premium traffic on xx Network, which will create demand for it. By then it should be easy to buy it on decentralized cryptocurrency exchanges.

xx coin is not used in mainstream P2P crypto payments and speculation (which is easy to check by looking at turnover). So far its main use case is staking.

Because no coin ownership or transactions are required for participation, EU-based fans of xx Network promote privacy and use the cMix services without holding a single xx coin!

Take-aways

Most EU-based promoters of the top privacy coins will gradually cease using their coins in ways that protect privacy. What will they promote then?

Some will hodl and drop out, while few others may pump and dump their cons for as long as those coins are listed on a centralized exchange.

Those who remain active on centralized social media are very likely not going to be the user of the very coin they promote.

I therefore expect a significant drop in social media presence of real EU-based users of privacy coins.

Dr. Chaum picked a different way to fight the good fight and latest changes in the EU regulations related to AML do not affect xx Network any more than they affect the regular privacy-less coin. Not to mention that all of us can use the main thing we advocate - xx Network - without any transactions on the xx blockchain. For most users that means no transactions, no reporting and no regulations to worry about.