In 2019, stable coins raised expectations that cryptocurrencies would be adopted on a large scale. The year 2020 is changing those hopes because of tightening government regulations. The first event happened just 10 days into the new year. The European Union’s landmark Fifth Anti-Money Laundering Directive was a multinational response to the Panama Paper scandal.

Anonymity is a huge problem in cryptocurrency. It is what draws people to the coins, but it is also what inspires leaders to regulate the coins. Government authorities are looking for ways to tighten loopholes around rich company owners and individuals who try to avoid paying taxes. However, there are still small nations that allow the 0.1 percent to hide their money with ease.

Diverting money to these places is not always illegal, but it makes it more difficult for a government to make charges of tax evasion, financing of terrorists or money laundering. Regulators want to act on the widespread belief that anonymous transactions should have their details reported to the government when the government conducts investigations of financial crimes.

Around the world, governments are considering measures to prevent cryptocurrencies from being used to flout financial laws. One example is Britain with relaxed financial regulations after Brexit. This is happening because Britain has to do something in order to get more economic partners. It has to be careful though in order to defend itself against financial problems from anonymous cryptocurrency crimes. Her Majesty’s Revenue and Customs has a $130,000 project for a company or individual to make a tool to help it collect information through cluster analyses of cryptocurrencies.

Most cryptocurrency users are honest. However, a few small operators use them for nefarious purposes. Those purposes include financing terrorists, laundering money and selling drugs. Regulatory changes could make it more difficult for the average Joe to use a cryptocurrency. More regulations means more fees, so criminals will pay more of those fees. Regulators have a lot of good intentions, but it is tough to say whether or not their proposed regulations will have the desired effect on the target group of criminals.