Most exchanges and payment processors in the United States are reluctant to accept Bitcoin that have been applied to CoinJoin since it is too expensive to trace the incoming Bitcoin back to a wallet that was issued by a KYC exchange (or KYC wallet/exchange system).
To make this easier for business, exchanges like Coinbase and payment processors like CoinGate use software designed to trace the source address of the payer back to such a KYC wallet.
Obviously, this damages the user's privacy, but how else are authorities going to catch a criminal that commits money laundering?
For instance, Wasabi Wallet decided to start blacklisting addresses or they would be forced by the
federal government to shut down for good: (https://blog.wasabiwallet.io/zksnacks-blacklisting-update/)
So what are the Bitcoin community's thoughts on the federal government's insistence on exchanges applying KYC to protect funds from being laundered or used in a crime ring?
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