Don't Worry About Bitcoin Or Ethereum But These Cryptos Could Be Used To Evade Sanctions, Top US Think Tank Warns

Brookings, an institute described as one of America’s most prestigious think-tanks, believes that law enforcement has a misguided perception of Bitcoin BTC/USD and Ethereum ETH/USD as a way to evade sanctions.

What Happened: In a report published on March 7, first noted on Protos, the think-tank said that a “persistent misconception” has taken root among policymakers since cryptocurrencies branched into the mainstream.

Citing Bitcoin as a way around sanctions “proves an inaccurate understanding of how the technology works,” as per Brookings.

“Although Bitcoin and related cryptocurrencies offer some anonymizing features, they are in fact highly traceable. In a series of recent cases, investigators have demonstrated how to use the visible and immutable ledger of decentralized blockchains to trace illegal transactions and sometimes even recover stolen funds,” the report read.

Instead, policymakers should be concerned about privacy-focused cryptocurrencies like Monero XMR/USD and Zcash ZEC/USD.

Monero uses privacy-enhancing technologies to conceal the identities IP addresses and identities of those trading tokens. These features give criminals a way to evade law enforcement and convert coins to cash, Brookings said.

Incidentally, XMR and ZEC surged by 28.3% and 20.9%, respectively, on Wednesday — outperforming BTC and ETH by a considerable margin.

Researchers also pointed to the use of decentralized exchanges (DEXs) as an area of concern for officials. Exchanges like Uniswap UNI/USD don’t require users to comply with KYC laws, unlike centralized ones such as Coinbase Global Inc COIN that comply with government agencies’ requests for customer information.

DEXs are also not controlled by a single entity, which makes it difficult to police sanctions enforcement across these platforms.

Price Action: At press time, Bitcoin was trading at $39,170 and Ethereum was trading at $2,607. Both assets gained less than 0.50% in the last 24-hours.

Monero was trading at $171.98, down 1.49% over the last day. Zcash was trading at $153.12, up 8.84% over the same period.

Photo by Kristina Flour on Unsplash