{"id":612,"date":"2018-07-13T17:13:59","date_gmt":"2018-07-13T21:13:59","guid":{"rendered":"https:\/\/www.amp.legal\/blog\/?p=612"},"modified":"2018-07-13T19:38:38","modified_gmt":"2018-07-13T23:38:38","slug":"blockchain-anonymity-ban-cuts-risk","status":"publish","type":"post","link":"https:\/\/www.amp.legal\/blog\/blockchain-anonymity-ban-cuts-risk\/","title":{"rendered":"Blockchain Anonymity Ban Cuts Risk"},"content":{"rendered":"

Cryptocurrency imitates the key features of traditional currency and adds the advantages of providing transaction transparency and user anonymity. As invented by an anonymous programmer<\/a>, the core nature of cryptocurrency is built around the concept of anonymity. In fact, one of the biggest selling points for cryptocurrency is the anonymity of the transactions.<\/p>\n

Traders of cryptocurrency prefer to keep their transactions private for various reasons. Yet, cryptocurrency transactions are not completely anonymous. Instead, the transactions are actually \u201cpseudoanonymous<\/a>\u201d because the blockchain<\/a> ledger is public. For example, although a person\u2019s name or address stays hidden, the person may be linked to a public Bitcoin<\/a> address.<\/p>\n

Crackdown on Anonymity<\/h3>\n

Countries\u00a0around the world are struggling with regulating cryptocurrency. Government officials are afraid that the anonymity of cryptocurrency creates an easy method for criminals to commit cyber crimes, such as extortion, fraud, money laundering, tax evasion, and identity theft.<\/p>\n

\"\"An article from CoinCentral, South Korean Law Firm Files Constitutional Appeal Against Exchange Regulations<\/em><\/a>, by Colin Harper, explains how one country is trying to crack down on cryptocurrency crimes. In late 2017, the South Korean government required exchanges to verify the identity of an account holder. This requirement bans anonymous trading and only allows transfers through \u201creal-name accounts.\u201d Opponents vowed to fight the ban in court on the grounds that the new rules were unconstitutional.<\/p>\n

Risk Avoidance with AML and KYC<\/h3>\n

In the United States, banks must follow Anti-Money Laundering<\/a> (AML) regulations. The Bank Secrecy Act (BSA) of 1970 established a framework for a variety of regulations to prevent unlawful transactions.<\/p>\n

After 9\/11 and the global financial crisis, Congress enacted rigorous requirements<\/a> to banking regulations. As part of the Patriot Act, banks must follow the \u201cKnow Your Customer\u201d (KYC) rule, which strengthened the BSA. KYC requires<\/a> banks to identify their customers and conduct due diligence to determine potential risks.<\/p>\n

The AML and KYC<\/a> rules form a basic structure to regulate cryptocurrency. However, these rules work against anonymity, which is the foundational philosophy of the blockchain. Regardless of the founding principles, many cryptocurrency exchanges require their customers to complete an account verification process to avoid risks. Meanwhile, the governments\u00a0around the world<\/a> continue to integrate the AML and KYC rules into their cryptocurrency regulations.<\/p>\n","protected":false},"excerpt":{"rendered":"

Cryptocurrency imitates the key features of traditional currency and adds the advantages of providing transaction transparency and user anonymity. As invented by an anonymous programmer, the core nature of cryptocurrency is built around the concept […]<\/p>\n","protected":false},"author":1,"featured_media":613,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[35],"tags":[59,34,84,87],"yoast_head":"\nBlockchain Anonymity Ban Cuts Risk - Cyber Law Blog<\/title>\n<meta name=\"description\" content=\"Cyber Law Blog explores legal topics with technology including privacy law and cybersecurity.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.amp.legal\/blog\/blockchain-anonymity-ban-cuts-risk\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Blockchain Anonymity Ban Cuts Risk - Cyber Law Blog\" \/>\n<meta property=\"og:description\" content=\"Cyber Law Blog explores legal topics with technology including privacy law and cybersecurity.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.amp.legal\/blog\/blockchain-anonymity-ban-cuts-risk\/\" \/>\n<meta property=\"og:site_name\" content=\"Cyber Law Blog\" \/>\n<meta property=\"article:published_time\" content=\"2018-07-13T21:13:59+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2018-07-13T23:38:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.amp.legal\/blog\/wp-content\/uploads\/2018\/07\/Mask-Art.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"900\" \/>\n\t<meta property=\"og:image:height\" content=\"500\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Alice M. 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