- France wants to trace all cryptocurrency transactions to detect illegal activities.
- ComplyFirst creates a tool to enhance compliance with regulatory requirements and make privacy coins safer.
- Monero may benefit from strict KYC policies in France.
French authorities developed strict KYC (Know Your Customer) measures for the cryptocurrency market. The French Ministry of Economy and Finance will officially present the new rules by the end of the week, Simon Polrot, President of Paris-based crypto association ADAN, said in an interview with The Block.
France plays it hard on cryptocurrencies
All cryptocurrency trading platforms, including those that support only crypto-crypto exchange, will have to register with the Autorité des Marchés Financiers (AMF), country’s financial markets regulator, and obtain a special license for providing crypto trading and custody services in France.
Apart from that, the French authorities will require a comprehensive KYC procedure for all cryptocurrency operations, irrespective of the transacted amount.
Currently, KYC applies only to crypto-to-fiat transactions worth over €1,000 but the new rules will remove this limit.
Pierre-Guy Bareges, CTO of Digital Service Group, added:
From a user experience point of view, we won’t be able to offer a nice experience to someone to make one small or two small transactions without the full KYC […], but that’s not a gamer changer in terms of business, because if my only customers were people making transactions of €100, I wouldn’t do this business.
The regulator uses terrorist attacks as a pretext
The local industry players believe that the authorities are tightening the grip in response to the series of terrorist attacks that might have been financed via digital assets.
Some digital asset service providers faced an investigation after they let people send crypto abroad to Turkey and Syria. However, the whole operation is nothing more than political posturing, Bareges said.
France is one of the die-hard cryptocurrency critics that denies the idea of privately-issued digital assets. Now the country is following the steps of the United States, where the authorities cherish the idea to trace all cryptocurrency transactions.
In October, the US Department of Justice urged the companies to cooperate with the authorities and provide the tools to monitor cryptocurrency transactions protected by end-to-end encryption.
They insisted that confidential transactions bear risks to public security as they prevent the authorities from detecting illegal activities, including information on sexually exploited children, violence and terrorism propaganda.
Even so, the community members criticized the initiative saying that tracing the encrypted data removes digital freedom and opens the door to authoritarian oppression.
Enhancing compliance to avoid criticism
ComplyFirst, an online resource for Anti-Money Laundering (AML) and other digital assets-related legal professionals, has developed comprehensive compliance briefs for the most popular privacy coins, like Monero, Zcash, Grin and Dash.
The service provides financial intermediaries and institutional investors with the tools to fulfil their obligations while providing privacy-preserving technologies to their customers.
The service currently aggregates the data from nine resources, including Tari Labs, DV Chain, Stoic Capital, CipherTrace and Cake Wallet. It offers a comprehensive due diligence questionnaire and compliance briefs on various cryptocurrencies to help companies avoid risks related to privacy-focused technologies.
Monero may become an unintended beneficiary
Earlier, FXStreet reported that blockchain analytics and intelligence company CipherTrace is working on a set of tools that will allow tracing transactions on Monero blockchain to find stolen or illegally used coins. The experts claimed that the software would deprive XMR of its privacy status.
However, at this stage, there are no workable tools to trace Monero transactions back to the sender or receiver if the participants choose to hide their identity. It makes the coin an unintended beneficiary of the authorities’ decisions to crack down on the cryptocurrency industry. As Bitcoin and other major digital assets are only pseudo-anonymous, traders focused on their privacy may choose to switch to Monero and other similar coins to protect themselves.
Monero (XMR) is the 15th largest digital asset with a current market capitalization of $2.3 billion. The coin has lost over 2% of its value in the past 24 hours to trade at $132.