According to a scientific study, state actors could target blockchains with high privacy levels if necessary. The statement sparked a heated debateespecially after both privacy-focused Monero and Zcash came under attack.
The research highlights concerns about privacy coins and their national security implications, particularly in relation to illicit activities such as money laundering, tax evasion and terrorist financing.
Governments attack privacy blockchains
A scientific paper published in the Journal of Cybersecurity study effectively advises governments to attack blockchains that protect privacy and the private sphere. The study, by Iwona Karasek-Wojciechowicz, was published more than three years ago, but has only now come to the fore.
In the recent period, several user theories have spread that the tactics found in the study were used against Monero. It’s like that privacy chainssuch as Monero and Zcash, are designed to enhance anonymity by hiding transaction details, making them increasingly popular among users who value financial privacy. However, the same function also attracted the attention of law enforcement agencies and state actors.
The author of the study outlined several methods to undermine trust in permissionless blockchains, including 51% and Sybil attacks, and price suppression. A type of malicious activity in which a single user creates multiple accounts to manipulate a network.
“User confidence can be significantly weakened by successful attacks that can undermine the entire community’s trust in the network’s protocol.”
– claims the author.
A study its key issue is the fight against money laundering. According to the author cryptocurrencies present a unique challenge for governmentsas they operate outside the control of the traditional financial system and thereby undermine the state’s ability to enforce laws.
However, the document also explains that these methods should only be used as a “last resort”. in the fight against money laundering, after other policy initiatives such as wallet blacklisting, transaction flagging, sanctions and other regulations have been exhausted.
The main problem is certainly criminals taking advantage of cryptocurrencieswho often use blockchains for money laundering and other illegal activities. In response to this, regulators have introduced a number of measures in recent years. The European data protection regulations It entered into force in 2016 with the aim of regulating general data protection and preventing money laundering and terrorist financing.
Fight against money laundering
The situation has not improved much by 2024. Effective tools and methods that could really prevent money laundering and crypto fraud have not been created since then. That’s why there can be voices who they see the solution in total government control. In essence, they would give access to government developers, allowing them to decode and read the data.
In fact, this would be a complete paradoxas granting access to public data on Monero and similar blockchains would mean that developers would be able to read data that they themselves promised would not be readable by anyone other than those directly involved in the transactions.
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Besides the GDPR also contains interesting contradictionswhich even the study acknowledges. Because anonymity and data security, which are best ensured by blockchains, are exactly in line with the regulation. Still, regulators are scrambling to figure out how to access this data.
So, on the one hand, the European GDPR calls for increased protection of data protection, and on the other hand, it aims to fight against money laundering policy and privacy. That way the regulations eventually conflict with each other. And drawing the right line between security risk and real data protection may not be worth entrusting to the state.
Another excuse to introduce stricter controls?
By Cointelegraph according to governments try to strengthen control by citing crime. In 2022, UN officials reported that terrorist organizations predominantly use cash to finance illicit activities. This claim was later confirmed by a US Treasury report.
Moreover, the Treasury Department’s May 2024 report also acknowledged that when criminal organizations use digital tools, they use centuries-old and well-established systems.
Still, that hasn’t stopped the US government from cracking down on cryptomixers and other privacy tools. The tough action sparked a heated debate, as many users fear that the many crypto platforms will not survive the increasingly strict regulatory environment.
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