Sunday, January 29, 2023

The European Central Bank Released Privacy Options For CBDC

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The European Central Bank released privacy options for CBDC and outlined all scenarios as well so let’s read more today in our latest cryptocurrency news.

When it comes to CBDCs, one of the main public concerns rests on the potential encroachment upon privacy and the European Central bank released a presentation addressing this issue, stating that the Eurosystem can be only able to see the minimum transaction data but user anonymity is not a desirable design option. Responding to the EU citizens’ concern over the privacy issue involved in CBDC, the presentation included three different privacy options that can be adopted. The current baseline scenario similar to the digital transactions via private banks will allow for the digital euro intermediaries such as banks to access the data while the ECB has not. The presentation outlined that such transparency is for the purpose of AML and countering the financing of Terrorism.

The bank labeled the other options as the desirable paths it could go after for the digital currency. One can allow a higher degree of privacy for low-value/low-risk payments which implies simplified checks on the transactions. The standard controls will still apply to the high-value payments but the documents didn’t specify the threshold qualified for a payment type. The last option offered the highest degree of privacy and allowed the transactions and balances to be nontransparent to intermediaries as well as the central bank. The bank noted that the offline option can only be available for low-value payments.

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Crypto venture adviser Patrick Hanse said the offline payment scenario is pretty close to physical cash payments. While stating that the Eurosystem can be restricted access to transaction data and the bank clearly outlined that anonymity is not a desirable feature because of concerns related to money laundering. The presentation raised the trade-off between privacy and the EU regulatory framework while implementing AML measures that tend to override users’ financial privacy. Hanse added that one of the main takeaways from the presentation is that the Central Bank outlined how far it could go to protect the user privacy.

As recently reported, The European regulator – Anti Money Laundering and Combatting the Financing of Terrorism watchdog listed monitoring the crypto sector along with the “gatekeeper” professionals like lawyers and accountants as priorities in the EU nation’s push to combat money laundering. In the annual reports, MONEYVAL called upon EU jurisdictions to assess complaince with international standards and implement strict regulatory policies to battle moeny laundering facilitated by crypto assets.

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