According to the European Cybercrime Center, which operates under Europol, some of the transactions carried out through Monero cannot be traced. In a recent Webinar, Jerek Jakubcek, who is an analyst at Europol, gave the example of a suspect they were tracking down. He said that the suspect transacted using Monero and using the Tor privacy browser.
Due to this combination, they found it difficult to track down the suspect. Tor browser scrambles IP addresses and reroutes traffic through its network. The result is that law enforcement officials have a hard time tracking down a user’s web history. By using the combination of Tor and Monero, Europol officials were not able to trace his address.
He analyst went on to say that any transaction carried out on the BTC network was visible and thus easy to trace. As a result, they had more success pursuing suspects that use BTC than those that use Monero. He added that some suspects had figured this out and as a result, they were changing their funds form ETH and BTC into Monero to stay invisible.
A situation where governments are unable to track criminals who use BTC and Monero is not likely to last for long. If they do not manage to develop tools to track down Monero uses, they have the law on their side. They could simply change it, thus making it harder for criminals to use Monero. For instance, they could ban crypto exchanges from handling Monero coins, which would make it almost impossible for criminals to cash out into fiat.
Such a situation is already developing in Germany. This was after the nation’s finance minister determined that tracing Monero transactions was impossible. The result is that the government is working on legislation, which will adhere to new AML directives issued by the EU. This could compel companies in Germany such as crypto wallet providers and exchanges to stop supporting Monero or to introduce measures that are more stringent. In general, most governments are averse to privacy coins. While many will tolerate cryptocurrencies like BTC, it is likely they will take harsh legislative measures against privacy coins.