The Office of Asset Foreign Control (OFAC) announced that it may add digital currency addresses to the Specially Designated Nationals (SDN) list. This is to warn the public of their possible association with blocked persons or sanctioned governments, terrorism, trafficking in weapons of mass destruction, and illegal drug trafficking. This new legislation presents a new challenge for privacy coins but also an opportunity.
In addition, the US congress also passed the Clarifying Lawful Overseas Use of Data (CLOUD) act which will mandate international agencies to reveal online user’s information.
This is problem a for crypto-currencies with open source blockchains that allow their transaction history to be traceable. These coins may become a roadmap for investigators in that any account found in its track can become tainted, leading investors to potentially become suspicious and have their accounts and activities inadvertently scrutinized.
While some argue that the information contained in the blockchain does not contain user identifying data, and therefore, it will not result in direct association with a blocked person, the addresses can be become suspect and seized. The ACLU contends that the CLOUD act is a violation of human rights and violates the 4th amendment.
Exchanges can also become targeted and their licenses suspended or revoked should they fail to cooperate with law enforcement agencies. This new legislation opens the door for a whole range of questions and speculation of what regulation could mean for the future of the crypto market. But this uncertainty also brings opportunity.
Coins like Monero, Verge, and Linda stand to benefit from this potential threat to user’s privacy. As investors can choose to trade in privacy coins for sensitive transactions involving large sums of money for example or to avoid their addresses being tainted. Where coins like ZCash and Dash offer options for ‘grey’ transactions where users can add information, Monero is strictly private and would make for an ideal choice of anonymity.