EU passes World's first Crypto regulation | Crypto Anonymity is dead

[Sauron]

20 hours ago, Beskamir said:

I'm curious how they intend to actually police Monero usage. Seems like that'll be as successful as policing software piracy. The only part they could realistically get in the way off would be exchanging Monero to fiat or vice versa and you can in theory bypass exchange blocking by just resorting to in person exchanges or using gift cards like scammers often do. The only people that this will affect are normal/honest people. Criminals that don't give a shit about breaking the law won't even be majorly inconvenienced.

Most transactions are brokered by exchanges and either way... the blockchain is public and transparent by design. Unauthorized transactions can be blocked at processing time.

 

And no, there are no "normal/honest people" using crypto for legitimate purposes that would be hurt by this regulation. There are normal people who got swindled into buying some crypto but they certainly aren't using it to buy groceries.

2 hours ago, Kisai said:

No kidding. If two people want to buy weed, porn, sex, etc. Who CARES. All those small, one-off transactions are already not anonymous when done by legal means, when VISA and AMEX aren't trying to control your content. But because crypto coins have no authority to police anything you can use it for anything. It's just a question of how much of an idiot the person is to use it for something that is actually illegal. Despite what people may think, the majority of small drug, porn, sex, etc, transactions are legal, and they wouldn't be taxed if they weren't. VISA and AMEX just don't want the risk of a chargeback and that's the entire reason why they do disgusting censorship policies that Paypal then decides to use as a cudgel to shutdown artists that aren't even drawing porn.

 

There is an entire "underground" paypal/patreon/stripe/etc adult market that is basically "don't say it's porn, because Paypal will shut it down and Stripe has to pretend porn doesn't exist otherwise they will get shutdown by VISA"

 

Just move it into the light and let people buy things they want. I'm not saying any specific crypto currency is good, but if VISA continues down this road, ALL digital purchases are in trouble.

that seems like a completely separate issue that has nothing to do with anonymity... if you're buying something illegal then it's illegal no matter what and this was just a loophole (not that it's impossible to buy illegal stuff with fiat currency anyway). if what you're buying is not illegal then there is no real issue with the government knowing and taxing the transaction.

 

To address the problem you mentioned the real solution would be to stop relying on private providers for digital transactions and having countries' central banks handle them instead; that way the only limitation would be legality.

[Beskamir]

3 hours ago, Caroline said:

So in person exchanges and gift cards are only used by scammers, got it. Welp, guess I'm a criminal now.

That wasn't at all what I was trying to say! My point was that in person trades and gift cards are a known tactic that's commonly used by criminals for moving wealth around without corporate or government awareness.

 

  

3 hours ago, Sauron said:

Most transactions are brokered by exchanges and either way... the blockchain is public and transparent by design. Unauthorized transactions can be blocked at processing time.

 

And no, there are no "normal/honest people" using crypto for legitimate purposes that would be hurt by this regulation. There are normal people who got swindled into buying some crypto but they certainly aren't using it to buy groceries.

Monero's blockchain is neither public nor transparent by design. A public blockchain is one of the dumbest design decisions imaginable since a world where everyone can track everyone else's earnings/expenses would be beyond dystopian. Exchanges are the reason why I mentioned in person trades, gift cards, etc. Those bypass the need for a centralized exchange and as such remove the only major point of weakness that the government can realistically target. By that I mean, if stopping in person trades was possible, drug dealers wouldn't exist, and if stopping online gift card trading was possible, then scammers wouldn't exist. Point being no government will ever be able to completely stop motivated people from getting and using their Monero without shutting off the entire internet and returning us to the stone age before we tricked rocks into thinking.

 

As for legit uses of Monero, those exist. As an example, Kenny from Mental Outlaw allows people to use Monero when buying merch (shirts, mugs, etc) from his online store.

[Kisai]

5 hours ago, Sauron said:

 

that seems like a completely separate issue that has nothing to do with anonymity... if you're buying something illegal then it's illegal no matter what and this was just a loophole (not that it's impossible to buy illegal stuff with fiat currency anyway). if what you're buying is not illegal then there is no real issue with the government knowing and taxing the transaction.

Again, I'm not advocating for crypto, far from it. But I do see what's happening in the adult art/video/cartoon/game markets and the ONLY place in the world where you can buy this stuff without a problem with VISA/MC is Japan. EU is a flimsy market where you can buy but you risk the chargeback, and the US/CA card banks think if you're buying adult artwork you're somehow buying CEI or you're going to charge it back 10 minutes later. It's not even just adult material, It's also youtube/twitch streamers getting these $1000 tips from people who then immediately chargeback.

 

The thing that "crypto" coins can be, by accident, is removing the ability for people to do chargeback fraud. The problem with using it is that the transaction costs to actually using it is often several hundred times that of using a credit card. That inconsistency is what keeps it from ever being anything more than a joke "payment" system.

 

5 hours ago, Sauron said:

To address the problem you mentioned the real solution would be to stop relying on private providers for digital transactions and having countries' central banks handle them instead; that way the only limitation would be legality.

Nope, the proper solution is a P2P currency system that removes VISA from the payment system entirely. American payment's are basically dominated by Mastercard, and the underlying debit system is still VISA or Mastercard. So it's really needed in the US. Canada has third option, but Interac has largely just been a grift by Canadian banks, since the only reason you'd want to use Interac is if you have no credit, because you get charged for accessing your own money. Anyone with half a brain cell should realize being charged 50 cents every time you want to buy a dollar item is stupid. 

 

The underlying problem is that conventional banking permits chargebacks as a way of fighting fraud, but it enables one kind of fraud (Where people buy things with no intent of paying) where as crypto solves that one, and replaces it with another (where people get grifted, or hacked and their wallets emptied with no recourse.)

 

The correct middleground is to assign limits to accepting or sending amounts (eg $50, $100, $1000, $10,000) that require more verification. If you're spending $50 or under, you can use NFC/P2P payments, card-to-card, app-to-app, without an interbank stepping in. You get 5 uses of this and then you HAVE to use your card/app with an on-network transaction before the card will permit another. Values between $50 to $1000 require an on-network interaction that the physical card or banking app has to be activated to use (eg using the physical card for a $51 amount will make the app popup and go "are you sure you want to pay XXXX $51.00?") $100-$1000 then sends the same message, but also requires you to actively login to the app and confirm the identity (eg with the camera) by scanning the QR code of the other person's app/service/website/POS. The QR code will contain a transaction nonce for one-time use. Over $1000 requires a three-way transaction which involves a "witness to the transaction", which requires a third party(eg the bank, or the cashier) to scan QR codes on both.  And over $10,000 requires you to physically go to the bank to authorize who you permit to send it to.

 

Like I can think of multiple solutions to stripping fraud out of the system, but most of then involve intentionally making all transactions a three-way transaction, where the two people who want to do the transaction meet the third person, in person, and the money simply goes through the third person. Should a request to reverse the transaction be initiated, the same third person has to be involved. Doing so would slow things down, which is why this hasn't really been a thing except as escrow for big ticket items.

 

 

[Stahlmann]

Good, regulate Crypto like real money. Then everyone will see it's just like regular money with extra (unnecessary) steps and less security. Hopefully this is the start of the death of Crypto.

[05032-Mendicant-Bias]

9 hours ago, Beskamir said:

That wasn't at all what I was trying to say! My point was that in person trades and gift cards are a known tactic that's commonly used by criminals for moving wealth around without corporate or government awareness.

It's the size the problem.

If you want to launder two billion dollars, you need 10000000 amazon gift cards worth 200$. That's a LOT of money mules. A LOT.
Tether prints money out of thin air in batches of two billions with a click.
Tornado Cash has a 100ETH pool that obfuscates 20000$ per transaction.

And if you limit the size, and add consumer protections... You have CBDC. That's how the e-cyn work, you can make little transactions without checks bypassing most of the checks, but still have the full protection of the underlying bank account.

 

7 hours ago, Kisai said:

Nope, the proper solution is a P2P currency system that removes VISA from the payment system entirely.

Unregulated P2P is a nightmare. It's even more fraudolent than regular crypto exchange transfer.

In P2P, the exchange shuffles all the risk on the user. It's attractive for Binance because the banking system is excising crypto bank account from the banking system after Silvergate, Signature and Silicon Valley Bank. With P2P, it's the user bank account that are flagged as fraudolent.

[Donut417]

On 5/20/2023 at 1:15 PM, porina said:

When using existing services like Coinbase and Bitpay, you already have to provide ID before they deal with you. I think both are HQ in USA or have presence there. Do they already have similar regulations, or maybe they considered it covered by existing regulations regardless of the crypto aspect?

Bear in mind that Crypto is taxed in the US. Which is why they need ID, so they can report transactions to the IRS. 

[Mark Kaine]

This "news" is weird because thats how crypto always worked here,  no "anonymity " whatsoever- that was actually 100% false advertising (so illegal by itself) 

 

maybe the first EU wide regulation, but thats not really changing anything. 

[CarlBar]

21 hours ago, Kisai said:

No kidding. If two people want to buy weed, porn, sex, etc. Who CARES. All those small, one-off transactions are already not anonymous when done by legal means, when VISA and AMEX aren't trying to control your content. But because crypto coins have no authority to police anything you can use it for anything. It's just a question of how much of an idiot the person is to use it for something that is actually illegal. Despite what people may think, the majority of small drug, porn, sex, etc, transactions are legal, and they wouldn't be taxed if they weren't. VISA and AMEX just don't want the risk of a chargeback and that's the entire reason why they do disgusting censorship policies that Paypal then decides to use as a cudgel to shutdown artists that aren't even drawing porn.

 

There is an entire "underground" paypal/patreon/stripe/etc adult market that is basically "don't say it's porn, because Paypal will shut it down and Stripe has to pretend porn doesn't exist otherwise they will get shutdown by VISA"

 

Just move it into the light and let people buy things they want. I'm not saying any specific crypto currency is good, but if VISA continues down this road, ALL digital purchases are in trouble.

 

 

 

 

Oh completely agree with you there.

 

19 hours ago, jagdtigger said:

Nice dreamworld you live in there.....

 

For you to be able tog et a bank account with someone they have to be operating in the EU. If a particular exchange is banned in the EU that bank won't do business with them and you have no way to buy or sell your crypto for real money. You can shuffle crypto around without the bank account but you've no way to cash out or put money in.

 

And a bak that flagerantly goes around the EU stipulation is likely to find itself banned from the global transaction system, (this is allready somthing thats done with banks that finance terrorist and criminal operations), which again makes it unusable to the average joe because they again have no way to put money into or take money out of said bank.

[Brooksie359]

On 5/20/2023 at 1:25 PM, PDifolco said:

Crypto operators pay for the energy they use.. And prosecution and bankruptcy aren't a crypto thing, look at US banks  

What I'm telling is that early regulations kill innovation, and we got that since 30 years in the EU, as a result we fall behind in every domain...

Saying that crypto operators pay for their energy isn't even true as there have been quite a few cases of crypto operations either running off of electricity that they don't pay for or they connect into the grid illegally. Regardless the issue isn't that they aren't paying for the energy the issue is the amount of energy they are using and unfortunately with pow they are incentivized to use as much energy as they possibly which is a huge issue. It's probably why they were thinking about banning pow cryptocurrency. I am not generally a fan of EU regulations but this one makes sense as there really isn't any reason why anyone would be so concerned about anonymous transactions unless they are doing something wrong. 

[Kisai]

8 hours ago, 05032-Mendicant-Bias said:

 

Unregulated P2P is a nightmare. It's even more fraudolent than regular crypto exchange transfer.

In P2P, the exchange shuffles all the risk on the user. It's attractive for Binance because the banking system is excising crypto bank account from the banking system after Silvergate, Signature and Silicon Valley Bank. With P2P, it's the user bank account that are flagged as fraudolent.

It is, but when the other option is "lie to paypal and hope you don't get caught" what option is there?

 

The type of regulation that needs to come down is that card processors and banks can NOT regulate what you buy or sell (illegal or not), a privacy regulation needs to exist that a bank, payment network, or intermediary (eg paypal, stripe, etc) can not block any transaction without a crime having being committed (eg police/fbi report.) "Reporting a chargeback" doesn't automatically penalize the seller or buyer, but it get's held up to 180 days until evidence has been provided, police reports filed, etc. No more splitting high risk and low risk transactions and dumping the burden of chargebacks on the maybe one bank in the country willing to deal with it.

 

When banks and their cards say they "protect you from fraud" what they really mean is they make the merchant eat the cost.

[05032-Mendicant-Bias]

1 hour ago, Kisai said:

It is, but when the other option is "lie to paypal and hope you don't get caught" what option is there?

 

The type of regulation that needs to come down is that card processors and banks can NOT regulate what you buy or sell (illegal or not), a privacy regulation needs to exist that a bank, payment network, or intermediary (eg paypal, stripe, etc) can not block any transaction without a crime having being committed (eg police/fbi report.) "Reporting a chargeback" doesn't automatically penalize the seller or buyer, but it get's held up to 180 days until evidence has been provided, police reports filed, etc. No more splitting high risk and low risk transactions and dumping the burden of chargebacks on the maybe one bank in the country willing to deal with it.

 

When banks and their cards say they "protect you from fraud" what they really mean is they make the merchant eat the cost.

The system works like this, because if there are no prospect of losses, there are no incentives for legitimate businnesses to stop acting as a front for money laundering operations and claim: "oopsie, I didn't know it was money laundering! The client lose all and I keep my ill gotten gains. Okiee?"

Call me old fashioned, but I can just give an envelope with real money in the form of banknotes to someone in exchange of a service, and that transaction is off the book, and it's not even illegal! Nobody knows I gave 100€ to my niece for her birthday. It doesn't get more anonymous than using real money! It looks to me digital transactions reintroduced a solved problem, and proponents wants a fix that facilitate large scale fraud. 

 

I would be fine if the maximum anonymous transaction on tornado cash was 100$. Blockchain is so slow that you could only move 300$/s worldwid using blockchain that way, go for it! My problem is with printing a billion of fake dollars out of thin air. Anything needed to root out that abomination is game. I strongly believe that nothing good comes out of moving billions anonymously.

[Beskamir]

On 5/22/2023 at 3:15 AM, 05032-Mendicant-Bias said:

It's the size the problem.

If you want to launder two billion dollars, you need 10000000 amazon gift cards worth 200$. That's a LOT of money mules. A LOT.
Tether prints money out of thin air in batches of two billions with a click.
Tornado Cash has a 100ETH pool that obfuscates 20000$ per transaction.

And if you limit the size, and add consumer protections... You have CBDC. That's how the e-cyn work, you can make little transactions without checks bypassing most of the checks, but still have the full protection of the underlying bank account.

If you're moving that much money, you're a gang, mafia, corporation, etc higher up and the normie rules no longer apply to you. At that wealth you not only have your own team of lawyers but representatives in whatever banks you're using but your own politicians too.

 

As an example, Deutsche Bank hosted Epstein's bank account and had to be at least somewhat aware of what he was using it for. Except they were directly benefiting from wealth and as such happily turned a blind eye. The consequences they received for of enabling a criminal enterprise was settling for about a week's worth of profits in a lawsuit. No arrests, no substantial fines. Just a week's worth of their profits turning into an expense. So why wouldn't they or some other major company happily help someone illegally move 2 billion dollars if they were given a cut of it?

[williamcll]

On 5/21/2023 at 12:58 AM, jagdtigger said:

As usual this wont mean much, and the EU cant really do anything if exchanges outside the EU just shrug this off and continue business as usual.... (The worst it can do is a DNS block but we all know how little that matters.)

A lot of laundering and cybercrime has been found to exchange within eastern europe. With the exception of Russia other countries could be regulated.

[jagdtigger]

3 hours ago, williamcll said:

A lot of laundering and cybercrime has been found to exchange within eastern europe. With the exception of Russia other countries could be regulated.

They can certainly can try, but as i said previously, demand and supply always finds a way to meet no matter what they do.

[Supreme Calamitas]

Crypto anonymity has been dead for years if not decades, bitcoin, eth & monereo can be tracked back to the holder even outside the EU.

[05032-Mendicant-Bias]

11 hours ago, Beskamir said:

If you're moving that much money, you're a gang, mafia, corporation, etc higher up and the normie rules no longer apply to you. At that wealth you not only have your own team of lawyers but representatives in whatever banks you're using but your own politicians too.

Yes. By volume, banks are still unmatched in laundering real money because of said incentives.

 

Yet, in relative terms, the vast majority of real money is used to actually run the world. You just can't have most world run by crooks, so by its nature, most real money is flowing for productive reasons. In relative terms fake money is at least thousands of times more fraudolent than real money, because it's use case is fraud.

 

My point is there shouldn't be a fake type of money, running on a parallel slow, inefficient fake money circuit, with all the KYC and AML checks disabled, whose ONLY use case is facilitating frauds.

Crypto is most useful as a point of reference against reality, showing what happens when the flimsy AML and KYC protection of the banking system are removed. So I welcome the EU trying to bring crypto to the same (low) standards of real money, even if that will outright kill crypto. Crypto couldn't even survive being regulated like a casino.

[Paranoir andando]

Terrorism? Ha,Ha. More control for the slave sheeps.

I don't know if they will get it, being outside of their jurisdiction, but they try it.

 

Rich and criminals are the masters of the politicians. They have no problems.

[HenrySalayne]

On 5/20/2023 at 7:52 PM, PDifolco said:

Only domain where EU is innovative is on regulations.. "We don't understand this, let's regulate it" !

All crypto operators will leave the EU, that will never profit from it, what a bunch of idiotic bureaucrats

No free country on this planet is profiting from crypto currencies (maybe North Korea). This will have literally no impact on 99,99% of the population and the rest will need to find another way to order drugs, weapons and CP online without crypto.

 

On 5/20/2023 at 11:21 PM, Taf the Ghost said:

"Money Laundering" is only a crime because it's designed to enforce a racket of Bank control on money flows (remember, they make money on fees via movement of funds) and for taxes to be somewhat more easily enforced. It's basically the result of Income-based Tax Schemes. Which is why the actual target is always the normal, law abiding citizen, since they know AML laws don't actually prevent the movement of stolen or ill-gotten wealth.

This ≠ reality.

[dalekphalm]

On 5/21/2023 at 3:21 PM, TetraSky said:

Sad. Would've helped curb the wastefulness that is cryptomining. Be it from the specialized hardware that's entirely useless outside of mining and is pretty much doomed for the landfill once it's obsolete, to the power it consumes.

 

On 5/22/2023 at 12:21 PM, Brooksie359 said:

Saying that crypto operators pay for their energy isn't even true as there have been quite a few cases of crypto operations either running off of electricity that they don't pay for or they connect into the grid illegally. Regardless the issue isn't that they aren't paying for the energy the issue is the amount of energy they are using and unfortunately with pow they are incentivized to use as much energy as they possibly which is a huge issue. It's probably why they were thinking about banning pow cryptocurrency. I am not generally a fan of EU regulations but this one makes sense as there really isn't any reason why anyone would be so concerned about anonymous transactions unless they are doing something wrong. 

The thing about POW and energy consumption that really bothers me the most is that the system by design encourages you to use more electricity than is actually required to perform the work. This is due to the "self balancing" nature of the Difficulty Rate, which acts as a method to ensure that a steady supply of coins are mined. The more people that mine to "get rich", the higher the difficulty goes, to slow the miners down, etc.

 

It's a self-fulfilling prophecy that loops back on itself and never ends.

 

And why is that bad? Climate change and pollution, mostly. Running a Coal Power Plant to power a Crypto mining farm, for example - Jesus that's disgusting, and I loathe anyone who would do that.