The statehouse in Austin, Texas, where Texan stuff happens (via Shutterstock).
Alt coins,  Europe,  Regulation,  United States

From Paris to Texas, more calls to ban anonymous cryptocurrencies

A Texas legislator and French minister have called for laws to make privacy-focused digital currencies illegal to trade

A Texas state legislator and a French National Assembly deputy have both called for legal bans on anonymous cryptocurrencies recently.

As “know your customer” (KYC) and anti-money laundering (AML) technology grows more common in the blockchain business, the use of privacy-focused cryptocurrencies like Monero and Zcash seems to be coming under growing scrutiny.

In both cases, the legislators have called for the identification of both parties in a transaction involving cryptocurrencies.

In Texas, State Rep. Phil Stephenson (R-District 85), has proposed requiring Texans to provide proof of identity before they buy or trade cryptocurrencies. Stephenson, a self-professed small government conservative and certified public accountant, proposes in H.B. 4371 that “[b]efore accepting payment by a digital currency, a person must verify the identity of the person sending payment.”

This would make the free-market and individual freedom-oriented state the first in the nation to ban anonymous cryptocurrencies.

While identity verification would not be necessary if “payment is sent by a verified identity digital currency” the bill also states that Texas “may not use a digital currency that is not a verified identity digital currency.” He identifies that as a cryptocurrency “that allows the true identities of the sender and the receiver to be known before a person has access to another person’s digital wallet.”

The bill also instructs several finance and law enforcement agencies to identify verified identity digital currencies and educate the public and law enforcement officers on their use.

Meanwhile, French Minister of Labour, Solidarity, and Civil Service Éric Woerth suggests making “the taking of identity mandatory when opening accounts in crypto-assets,” in a cryptocurrency and blockchain report published earlier this year. He also suggested “the prohibition of the dissemination and trade of crypto-assets to guarantee complete anonymity by preventing, by their design, any identification procedure.”

Woerth’s proposal might not remain a one-country rule for long if passed. In January, European Union financial and banking regulators called for EU-wide cryptocurrency regulation, saying this “would best be addressed at the European level.” Strengthening EU-wide AML requirements was also recommended.

The goal, Woerth says, is to “create an environment that promotes the integrity, transparency and security of the services concerned for investors in digital assets.” He identifies four cryptocurrencies—Monero, PIVX, DeepOnion, and Zcash—as being purposefully designed “to circumvent any possibility of identification holders.”

The two bills are not the first time G20 nations have suggested such a ban. A similar suggestion was made a year ago by the Japanese Financial Services Agency, and on February 15, the Cyberspace Administration of China (CAC) issued a regulation requiring the collection of “real identity information based on the organization code, identity card number or mobile phone number for the blockchain information service users.” Of course, China has had a de facto ban on cryptocurrencies since it blocked cryptocurrency exchanges via its Great Firewall in February 2018.

Woerth calls for international regulation of cryptocurrencies, noting that, “crypto-active service providers are transnational in nature.”

 You May Also Like

Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.