After Tornado Cash, Are Other Tokens at Risk Too?

The crackdown of the Treasury Department on Tornado Cash has raised questions over the reputation of the rest of the privacy tokens taking into account ZCash ($ZEC) and Monero ($XMR). With this move, the freedom of the crypto investors who are operating with good intentions has also come within a danger zone.

U.S. Treasury Department Prohibits Tornado Cash Use

The head of government and legal matters at TRM (a research company), Ari Redbord, stated that each one living in the United States needs to be more cautious while using Tornado Cash as a method of transaction. He added that the sanctions come under the category of strict liability and therefore it does not matter even if the intent was good. Although many people utilize Tornado and other such mixing services to ensure their privacy.

However, others mask the tracks of their illegitimate transactions by becoming anonymous while doing such operations, as per Tom Robinson, the person serving as the chief scientist at Elliptic (a blockchain analytics platform). The rest of the privacy tokens including Zcash and Monero are now also in trouble as the U.S.-based users have been prohibited by the authorities from utilizing Tornado Cash.

The regulatory agencies have been keenly scrutinizing the privacy tokens for some time throughout the world while attempting to target the black markets powered by such tokens. South Korea and Australia have restricted them straightly. Improving Know Your Customer requirements implemented on the behalf of the anti-money laundering agencies may keep on making it hard for the customers to use these tokens. Respective laws take into account the AMLD-5 directive from the European Union as well as the FATF Travel Rule.

Can the Other Privacy Tokens Avoid Regulatory Crackdowns

As the latest analytical instruments are going through their development phases continuously, and there is a possibility for the computers to one day have the capabilities to crack the contemporary methods of encryption, classifying privacy coins as truly private is very difficult at the moment. The law enforcement institutions are likely to execute a crackdown on the transactions carried out with the utilization of Monero to get to the bad actors who are performing malicious operations with this privacy token.

In 2020’s September, up to $625,000 was offered by the IRS to anyone having the capability to crack down the network. A patent has been submitted by a company named Cipher Trace asserting that the network has been cracked by it, nonetheless, these claims have been disputed by the community of Monero. Keeping all these moves in view, it is likely that Zcash ($ZEC), Monero ($XMR), and the rest of the privacy coins may also receive the same sanctions as those enforced on Tornado Cash-based Transfers.