Top Highlights

• The First Report on Encryption by the EU Innovation Hub for Internal Security, a "collaborative network of innovation labs" from across EU member states, argues that alongside technologies including Mimblewimble, zero-knowledge (zk) proofs, coin mixers and privacy coins such as Monero and Zcash, "layer 2 solutions such as the lightning network migh...
• The report notes that the Lightning Network's "two-party multisignature payment channels will not broadcast all transactions to the blockchain, but only the opening and closing of the channel," adding that it and other layer 2 solutions could cause cause "problems for law enforcement investigations."
• The report also takes aim at coin mixers such as Tornado Cash, and privacy coins including Monero, Zcash, Grin and Dash.
• It highlights their use of "zero-knowledge proofs and layer 2 solutions" that enable some transaction data to be obscured
• The EU's Markets in Crypto Assets (MiCA) framework, which comes into force at the end of 2024, cracks down on interactions between crypto-asset service providers (CASPs) and privacy coins, prompting crypto exchanges such as Binance to delist them.

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