Dash [DASH], which is deemed as a privacy coin, has come under fire for its alleged non-compliance with FATF’s travel rule. Many exchanges including OKEx, Coincheck and CEX.io have already delisted Dash or are considering doing it. However, Dash’s Regional Manager for Business Development in the US-Canada region, Omar Hamwi, has established that Dash is as compliant with FATF’s travel rule as Bitcoin in a blog on Medium. In fact, he has even said that Dash carries a lower risk of regulatory non-compliance than Bitcoin.
What is FATF’s Travel Rule?
FATF’s travel rule dictates all Virtual Asset Service Providers (VASPs) to share relevant customer data with beneficiary institutions. The data includes the sender’s name, the sender’s account number used for processing the transaction (e.g. cryptocurrency wallet), the sender’s identification details such as their address, or ID card number, beneficiary’s name and beneficiary’s account number to which the transaction has been processed.
Is Dash Compliant With FATF’s Travel Rule?
Since the announcement of FATF’s travel rule, several exchanges have announced that they will be delisting Dash and other privacy coins including Monero and ZCash. In September, OKEx had announced that it would be delisting Dash, but in earlier in October, it said that it is reviewing its decision to do the same. According to a Twitter handle, Electric Coin Company, CEX.io may also delist Dash. Coincheck had also announced in May that it would be delisting Dash, Monero, and Zcash.
Dash, however, is as compliant with FATF’s travel rule as Bitcoin, as per a company executive. Dash’s Regional Manager for Business Development in the US-Canada region, Omar Hamwi, recently published a blog on Medium in which he explained how Dash transactions were not anonymous and how it was possible for Dash to be compliant with FATF’s travel rule.
The blog establishes how the Bitcoin network and the Dash network are completely identical –
- Both Dash and Bitcoin network operates with the same transaction ruleset.
- Both the networks are public blockchains, and are transaction data – sender’s address, receiver’s address and the transaction amount are recorded transparently on the blockchain in both the networks.
- Both Bitcoin and Dash optionally utilize CoinJoin to offer transactions a certain level of privacy. CoinJoin, while it enhances the privacy aspect of a user’s profile, doesn’t provide the user with complete anonymity. In fact, CoinJoin can be used with any cryptocurrency network. The techniques which are used for analyzing Bitcoin transactions are also applicable to the Dash network.
Therefore, if Bitcoin can be compliant with FATF’s travel rule, so can Dash be.
Dash is Not a “Privacy- Centric Coin”
The blogs explain how privacy and transparency are not a binary, but rather a spectrum –
“This spectrum includes complete shielding of transactions (in which addresses or amounts are completely obscured from third-party observers), optional shielding of transactions, and completely transparent transactions. It can also include “off-chain” transactions and other enhancements that prevent third-parties from observing transactions at all.”
In the case of Dash, privacy is an optional feature – otherwise, its transactions are completely transparent by default like Bitcoin’s. The added privacy feature is available in the desktop wallet only. As for CoinJoin, it combines multiple payments from multiple spenders into a single transaction or a series of transactions. This makes it more difficult for third-party observers to determine which address paid which recipient or recipients. CoinJoin can be used with any transparent blockchain including Bitcoin’s, therefore making Dash and Bitcoin identical in terms of privacy. The blog also notes that with Bitcoin’s Lightning Network, bitcoin users get to enjoy anonymous transactions.
Bitcoin users have an “off-chain” option called the Lightning Network, which is completely anonymous. Even the nodes (e.g., servers) relaying transactions on the Lightning Network are unable to determine the origin or destination node of the payments it routes.
Thus, Dash carries a lower risk of regulatory non-compliance than Bitcoin.
The blog further goes on to say that Dash has partnered with many companies for ensuring compliance with FATF’s guidelines. Its compliance partners are helping it meet the Travel Rule and other compliance requirements in several ways including transactions monitoring, identifying and blocking transactions that make use of mixers. The cryptocurrency has also listed guidelines for VASPs on how they can identify, block and report suspicious Dash transactions with enhanced privacy features like the utilization of a mixer.
The blog explains in great detail how Dash does not violate FATF’s guidelines and helps exchanges decide whether to delist the cryptocurrency or not. What do you think of Dash’s move to explain how it is as compliant as Bitcoin with the FATF travel rule? Share your views with us in the comments below!
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
All things Blockchain & Crypto. 3 years for writing for Crypto Publications, ICOs and Blockchain cos. Book Junkie. Travel Freak. Food rules my mood. Enough said. Follow me on twitter @vinniesingh7 or mail me at vinnie[at]squadx.io