RUSI Report Warns Against Banning Blockchain-Based Privacy Tools

A growing concern in the cryptocurrency sector is the need for balance between compliance objectives and the increasing role of privacy-related protocols. A recent report from the Royal United Services Institute (RUSI) highlights this issue, based on a roundtable discussion between industry players and regulators.

The paper, titled 'Privacy-Enhancing Technologies in the Crypto Industry,' emphasizes that banning blockchain-based privacy tools would merely drive illicit activity to non-compliant services. This is because illicit actors are naturally attracted to privacy tools, and 'succeed by taking advantage of innovation.'

However, the roundtable participants agreed on the value of expanding collaboration between officials and providers to improve detection of illicit activity. They highlighted that legitimate uses for privacy solutions include company confidentiality and protection from $5 wrench attacks.

The report's author, RUSI Associate Fellow Allison Owen, emphasized that policymakers and enforcement agencies must work together with developers to ensure that privacy solutions integrate compliance features.