"Financial privacy is like a fundamental right," says Jesse Powell, CEO and co-founder of Kraken. But Bitcoin and other cryptocurrencies are pseudonymous, that is, transaction information is readily available for further analysis.
In response to this, over the years a new technology has been developed to recreate privacy by restoring anonymity. While this resulted in privacy currencies, such as Monero and ZCash, the regulations, however, have not been kind to these specialized currencies. Privacy currencies have been removed from several exchanges last year thanks to regulatory pressure from the Financial Action Task Force (FATF).
In a recent interview with Naomi Brockwell, a crypto advocate, Kraken's executive said there are many "legitimate" reasons to have financial privacy. While he admits that anything can be used for "nefarious" activities, Powell believes that it will take a long time for governments to understand its benefits. Added
«You don't have to use it for everything, but they have a safe purpose and I think they will be widely accepted»
Anonymity can also be maintained in Bitcoin transactions. One of those projects is CoinJoin that allows Bitcoin transactions to remain private by taking advantage of a combination of currencies. Along the same lines, Powell stated:
“We have heard regulators say that they are really currencies in favor of privacy, that Bitcoin is already so liquid and so large that if you wanted to hide your Bitcoin transaction, just mix it up, so that the trail was lost. You could do that, it's not that hard to do. You will not ban Bitcoin. So, it's like, why are we banning privacy coins?
In recent times, even Bitcoin transactions with coin mixers have been under the scrutiny of crypto exchanges. Binance Singapore recently froze a wallet of a Bitcoin user who used CoinJoin to add privacy to transactions. Although the user recovered their funds, it seems a wake-up call for financial privacy advocates.