How Anonymous Is the Purchase of Crypto? Regulations, Practice, Risks

In a worldwide environment where privacy is constantly under threat, purchase of cryptocurrencies is not an exception. In the early stage of this market, as the number of users and exchanges was not significant, the formalities around the identification of the users were not widespread. However, over the course of the years, the situation changed.

Criticisms on the anonymity of many Bitcoin users and the perceived risk that cryptocurrencies were used as a way of money laundering or for other illicit activities, increased the attention of international regulators.

Is crypto anonymous?
During the latest AMA (Ask me anything) meeting, when Bill Gates was asked for his general thoughts on cryptocurrencies, he responded:

“The main feature of cryptocurrencies is their anonymity. I don't think this is a good thing. The [government’s] ability to find money laundering and tax evasion and terrorist funding is a good thing.”

On the other side, Edward Snowden talking about Zcash (cryptocurrency aimed at using cryptography to provide enhanced privacy for its users), defined it as “the most interesting Bitcoin alternative,” adding:

”Bitcoin is great, but if it's not private, it's not safe.”

The proliferation of cryptocurrencies and their constant increase in negotiation volumes has increased the attention of different national and international authorities. As of 31 December 2015, the daily volume of cryptocurrencies trading was $46 mln, whereas during the same day of 2017 this arrived at $12,136 mln (hence representing a 26,283 percent increase).