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- Blockseer starts a mining pool with a transaction filtering feature.
- The community believes this trend contradicts the idea behind cryptocurrency.
- Transparency pin makes privacy-focused coins more attractive.
Cryptocurrency analytics platform Blockseer, a subsidiary of DMG Blockchain Solutions, has launched closed testing of a mining pool with a transaction filtering feature. According to the official press release, blacklisted transactions will not be included in the blocks.
The company intends to use its proprietary analytics tools, the Walletscore solution, and other verified sources of banned addresses to ensure compliance with the U.S. Government Office of Foreign Assets Control (OFAC) requirements.
Blockseer explains this in the press release:
Blockseer’s new Bitcoin mining pool will be North America’s first bitcoin mining pool that it will not only meet, but pass the US Government Office of Foreign Assets Control (OFAC) compliance for BTC addresses, as well as to provide the highest level of transparency, verifiability and corporate governance.
Aside from that, all miners will need to go through the Know Your Customer (KYC) procedure before entering the pool.
The team further explained that its goal is to ensure users that transactions from malicious addresses are not processed. They believe that cybercriminals and hackers damage the reputation of the industry and hinder mass adoption of cryptocurrency.
Commenting on the news, DMG COO Sheldon Bennett added:
The pool focuses on being transaction-free from known nefarious wallets, which use this medium in ways that continue to tarnish the reputation of cryptocurrencies, particularly Bitcoin, in the mainstream and prevent their widespread adoption. Blockseer’s pool will be the first of its kind to focus on governance, transparency, and building Bitcoin blocks on the network, which focus not primarily on transaction fees, but on solid data and transaction history.
Bitcoin becomes too regulated
Members of the cryptocurrency community are concerned about the idea of filtering out Bitcoin transactions. Many of them believe that this practice contradicts the spirit of the cryptocurrency philosophy. At the same time, Monero’s former lead developer Ricardo Spagni admitted that other mining pools could integrate tracking and filtering functionality as regulatory pressure increases.
He wrote on Twitter:
It is only a matter of time before most Bitcoin mining pools are forced to do this transaction filtering. It might be time to brush up on p2pool + to focus on Stratum v2 support for pools. It is also worth noting that adding more privacy to Bitcoin would prevent this.
Meanwhile, the founder of the Wallet Scrutiny website, Leo Wandersleb, noted that the introduction of the transaction filtering function on mining pools could eventually lead to the soft fork of the Bitcoin network.
Wandersleb commented on his Twitter account:
This slippery slope will lead to a soft fork where pools following this approach will refuse to build on blocks that don’t use their filters. Let them have their American currency.
Anonymous coins come to the fore
The pivot of transparency and compliance on the Bitcoin network brings out the benefits of privacy coins like Monero and Zcash. These allow users to remain anonymous and hide the digital track of their transactions.
Government authorities and regulators around the world have tried to breach privacy-centric money protocols with little success so far. FXStreet recently reported that the United States Department of Justice urged companies to cooperate with state authorities and provide tools to monitor illegal activities. Basically, they required a backdoor for end-to-end encrypted data to have the ability to detect potentially malicious activity.
However, privacy coins remain the thorn in the side of regulators and law enforcement, as all attempts to breach anonymous protocols have yielded no results.
In August 2020, cryptocurrency research firm CipherTrace introduced the first transaction-tracking tool Monero, developed at the request of the US National Security Agency (NSA). Authorities have embarked on research and development to breach Monero’s anonymity as it has become increasingly popular with cybercriminals in the Darknet.
The tool allows you to track stolen coins and assets involved in illegal activities. However, user identifications are not disclosed, which makes it useless for anti-money laundering procedures.
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