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So-called privacy cryptocurrencies such as Monero are more likely to be used for illegal activities than Bitcoin, according to a report published on Monday by Germany’s Federal Ministry of Finance.
In its "First National Risk Analysis 2018/2019,” the agency examined to what extent cryptocurrencies endanger financial security. It found that Monero, rather than Bitcoin, better enables anonymous transaction opportunities in money laundering and terrorist financing on the Darknet.
“Due to the increasing popularity of Monero on the Darknet, it can be foreseen that this crypto asset, especially, will gain more practical relevance in the future in the area of securing and exploitation [sic],” said the report.
It added that the sophisticated techniques employed by Monero make it “impossible” to track money, and that the anonymity afforded also increases the possibility of abuse for further criminal activity. In contrast, and especially on the DarkNet, the agency classified the risk of illegal activity with Bitcoin as low. Recent investigations have also highlighted Bitcoin’s lack of anonymity.
Going forward, the agency announced that German legislation would be amended in line with EU directives that extend responsibility for money laundering to so-called “obligated parties”—namely cryptocurrency exchanges, wallet providers or other providers of custodial services.
It also recommended increased vigilance, while admitting that Germany’s money-laundering risk was currently “medium-low,” and that there was a lack of reliable data on the topic of Bitcoin and terrorism—though a recent research paper found that crypto fundraising is becoming more common for terrorist organisations.