Secret Service Official: Congress Should take Action Against Privacy Coins

One of the top officials in the US Secret Service has recently asked the Congress to take action against the privacy-centric cryptocurrencies such as Zcash and Monero, which are designed to allow anonymous transactions between users.

The statement by the Secret Service official came in the form of a prepared testimony, given on Wednesday and just before the House of Representatives Committee on Financial Services Subcommittee director of the Secret Service’s office of investigations, Robert Novy. Novy is the deputy director of the office of investigations and the person who called on legislators to adopt certain measures towards the use of “privacy coins”.

As Novy said:

“We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools.”

Even though no coin was mentioned by name, the most prominent ones include Monero and Zcash. While the Monero transactions obfuscate senders and receivers, Zcash users can take advantage of the ‘shielded address’ found in the protocol and therefore keep the transactions private.

On the other hand, Bitcoin and most of the other pseudonymous – and not anonymous- which means that there are still some powerful tools which can trace the blockchain data. However, Bitcoin users still use tools such as “tumblers” and “mixers” to make tracking and tracing funds more difficult.

Many law enforcement officials and regulators have expressed their concerns over these privacy-preserving technologies, despite their supporters’ thoughts that they are no more anonymous than physical cash.