Privacy coins outlawed in Dubai

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By A D

The use and local issuance of privacy coins or anonimity-enhanced cryptocurrencies is now foridden in the middle eastern country, as put out in United Arab Emirates’ Virtual Assets Regulatory Authority(VARA) much-awaited rulebook.

Crypto regulation has always been a controversial topic in discussions about digital assets, and privacy coins more so owing to the illicit activities they have given rise to previously. Many countries like Australia, South Korea and Japan have either restricted the use of privacy coins or banned them altogether. Dubai joins them in banning these privacy-focused crypto assets, as mentioned in the latest rulebook of crypto regulations released by the Emirates’ local authority. VARA describes privacy coins as “a type of Virtual Asset which prevents the tracing of transactions or record of ownership through distributed public ledgers and for which the [Virtual Asset Service Provider] has no mitigating technologies or mechanisms to allow traceability or identification of ownership.” As a part of this prohibition, all extended activities associated to privacy coins such as exchange, issuance and more are to be ceased.

Zcash, Dash ad Monero are the three most popular privacy coins in use currently
Zcash(ZEC), Dash(DASH) and Monero(XMR) are the three most widely-used privacy coins. photo credits: Macademy

In 2022, Dubai set up its Virtual Assets Regulatory Authority(VARA), to oversee all crypto-related activities as the Emirates becomes a hub for crypto and blockchain companies. The regulatory body has now put out a set of rules for the local functionality of digital assets industry. Along with the crackdown on privacy coins, there are firm guidelines to prevent perplexity around funds and transactions, and up the security for consumers. Crypto firms looking to start operations in the region are also going to have to adhere to a set of authorization requirements before the commencement of any activities.
Dubai has been well- known to be a pro-crypto region. From encouraging blockchain based firms to several local companies permitting digital currency paments, it is well on it’s way to becoming a center of the blockchain revolution. The regulatory body has also given provisional service licenses to big players like Binance and Crypto.com. Dubai has hooked almost 500 crypto companies in its digital assets ecosystem till now.

Privacy coins refer to cryptocurrencies that obscure fund flow by prioritising animity in transactions, essentially creating a hindrance in tracking of transactions and ownership. Technically, privacy coins function exactly like other cryptocurrencies. Owners of the digital currencies can keep them in a variety of cryptocurrency wallets, and they use a public blockchain network to record and validate transactions. However, privacy coins encase these fundamental operations in higher levels of protection to conceal the identity of wallet holders and to anonymize transactions.

Japan banned privacy coins, like Zcash(ZEC), Dash(DASH) and Monero(XMR), apprehensive of the criminal activities and black market it seemed to encourage. A leaked draft of the European Union’s money laundering bill showed the officials plans to stop crypto companies and banks from dealing in privacy coins.
Leading exchanges like Bittrex and Huobi Global have also unlisted privacy coins, seven in Huobi’s case and all in Bittrex’s case.

crypto regulations are a widely discused topic. the crackdown on privacy coins maybe foreshadowing more stringent rules in the future.
Crypto regulations have been a widely discussed topic, with jurisdictions actively voting for a global regulatory framework for digital assets.

Cryptocurrency has arguably reached every region in the world, expanding its space exponentially. The advantages and broad scope it adds to the financial world is hard to ignore. The financial space cryptocurrency has created has given way to undeniably impressive operational efficiency, transactional transparency, capital optimisation and advanced security. It’s ever evolving potential and enticing opportunities have pushed limits of economic growth. The alarming rise in instances of hacking, money laundering and malpractices the field have pushed jurisdictions to focus on financial regulations for crypto operations in their regions. Big personalities and even scholars have weighed in on the this much debated topic, both for and against it.
The crypto market is quite a temperamental one and is seemingly recovering from the ‘crypto winter’, albeit slowly. The impact of regulatory frameworks on the performance of the market is yet to be determined. If regulation means putting a stop to the notorious wallet hacks and money laundering activities, the decision would be gladly welcomed by crypto users worldwide. Perhaps the recent wave of strikeonprivacy coins could be foreshadowing more stringent rules for the digital assets industry.

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