According to Decrypt, the latest report published by the EU Homeland Security Innovation Center wrote that the Bitcoin Lightning Network and other second-layer solutions could be used as potential tools in criminal activities.
The EU report Mimblewimble made comparisons with other encryption technologies, such as token mixers and privacy-focused cryptocurrencies such as Monero and Zcash, noting that these technologies, apart from the Bitcoin Lightning Network, can also be used by criminals to hide data.
The report also targeted cryptocurrency mixers like Tornado Cash and privacy-focused cryptocurrencies like Monero, Zcash, Grin and Dash.
The report also touched on Mimblewimble, the cryptographic protocol used by cryptocurrencies such as Grin, Beam, and Litecoin (LTC).
“ Cryptocurrency mixers such as the Bitcoin Lightning Network, Tornado Cash, and privacy-focused cryptocurrencies such as Monero and Zcash can be misused as potential tools in criminal activities.
Apart from these, Mimblewimble, a cryptographic protocol adopted by digital currencies such as Grin, Beam and Litecoin, is also defined as a significant obstacle in monitoring cryptocurrency transactions.
“In this regard, the EU is concerned that these technologies create difficulties for law enforcement by hiding transaction data.”
While the EU report emphasizes the need for regulatory measures to reduce the risks associated with privacy-oriented cryptocurrency technologies, it points out that these regulations may have a deterrent feature for criminals.
*This is not investment advice.