Litecoin is one of the first alternative currencies (altcoins) to emerge after Bitcoin (BTC). Created in October 2011, it is now the 20th most valuable cryptocurrency, with a market cap of over $ 4 billion, according to data from CoinMarketCap.
The MimbleWimble upgrade was designed more than two years ago as part of a Litecoin enhancement project. November 2019 was when the network began planning to increase anonymity between senders and transaction receivers on its network.
And now the MWEB is finally out with the approval of most of the nodes. The upgrade was made at the 2,257,920 Litecoin block level and comes with significant changes to the privacy features of the Litecoin network.
But the MWEB is not limited to new privacy features for LTC users. The MWEB also brings important improvements to activities on the blockchain. For example, its slicing feature helps to reduce unnecessary block transaction data as high as possible.
This feature breaks down long transactions into one. In other words, instead of recording each input and output separately, the block only records one pair of input-outputs, eliminating redundant data.
After many years of development and expectation from its community, Litecoin (LTC) finally upgraded its MimbleWimble Expansion Blocks (MWEB) upgrade on May 19th. But, with the blockchain upgrade primarily focused on conducting private transactions on the network, it could be argued that global regulations would be repealed.
South Korean regulations have been undermined
Despite the delight over the transaction secrecy that Litecoin has now launched, there seem to be regulatory issues, particularly with regard to Anti – Money Laundering (AML) and Know Your Customer (KYC) laws. In fact, it is for this reason that initial exchanges in South Korea have delisted the base from their platforms.
On June 8, 2022, Upbit, along with four other leading crypto exchanges in South Korea, secured support for Litecoin. Other exchanges include Bithumb, Coinone, Korbit and Gopax. However, each of the exchanges cited similar reasons, arguing that upgrading the MWEB is not in line with the provisions of the Financial Transaction Specific Reporting and Use Act. Under the provisions of the law, all Korean crypto exchanges are expected to comply with KYC and AML standards. Upbit in writing:
Despite the joy of transactional privacy just launched by Litecoin, there seem to be regulatory issues, especially regarding anti – money laundering (AML) and anti – money laundering (AML) laws. . In fact, it is for this reason that large exchanges in South Korea have removed Litecoin from their platforms.
On June 8, 2022, Upbit, along with four other leading cryptocurrency exchanges in South Korea, acquired support for Litecoin. Other exchanges are Bithumb, Coinone, Korbit and Gopax. Each of the exchanges stated roughly the same reasons. They claimed that upgrading the MWEB is not in line with the provisions of the law on the reporting and use of information about certain financial transactions. Under the provisions of the law, all Korean cryptocurrency exchanges are designed to meet KYC and AML standards. Upbit wrote about:
“The optional non-disclosure feature of transaction information, which is included in this network upgrade, is an anonymous transmission technology under the Specific Financial Information Act. »
Upbit has always reaffirmed its intention to limit money laundering and illegal activities of all kinds. It’s no surprise, then, that he and other top exchanges are not ready to get caught on the wrong side of the law, especially with the recent MimbleWimble privacy – focused upgrade to the Litecoin blockchain.
Bithumb and Upbit together account for most of the volume of trade in South Korea, and with their recent delisting, other South Korean exchanges are expected to follow suit.
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South Korean exchanges rejected cryptocurrencies related to privacy after regulators strictly and explicitly banned the establishment of dark coins in 2020.
How can exchanges remain compliant?
Meanwhile, all hope may not be lost yet when it comes to Litecoin in South Korea. On June 3, blockchain analytics firm and cryptocurrency compliance Elliptic announced what it claims is a solution to the bizarre situation caused by the MWEB upgrade.
The company argues that it has no intention of tracking the people behind the concealed LTC transactions. However, he believes it can help regulated companies continue to support Litecoin transactions, while complying with current AML regulations.
According to Elliptic, its solutions will allow merchants to know when funds that have gone through an LTC transaction are in a Litecoin transaction or wallet. With such information, companies may then decide not to engage in such activities which will be analyzed as “high risk”.
Essentially, this means that businesses, including South Korean cryptocurrency exchanges, can continue to support Litecoin as long as they are aware of it every time users enable the privacy feature.
According to Tom Robinson, chief scientific officer and co – founder of Elliptic:
“By providing visibility for Mimblewimble activity, Elliptic’s transaction tracking and wallet solutions provide the risk information for businesses to continue to support Litecoin in meeting their legal obligations. »
Robinson, in fact, talked specifically about exchanges and the possibility of Litecoin having to be removed from the list. He argues that exchanges are not necessary, because they can do their business perfectly without violating anti-money laundering regulations by backing Litecoin. In addition, he also said that you have to understand at some point that almost all cryptocurrencies have a way of hiding their transaction streams, including cryptocurrencies pegged to Bitcoin or Tornado Cash (TORN) pegged to Ethereum.
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Interestingly, this is not the first time Elliptic will lend solutions to privacy technologies such as MWEB. In 2020, the cryptocurrency compliance firm also added support for Zcash (ZEC) and Horizen (ZEN) privacy coins.
Mimblewimble acceptance is growing
Undoubtedly, the launch of Mimblewimble was a significant achievement in the blockchain industry. Especially with its mute feature and other upgrade benefits.
In light of this, some other blockchain projects like Beam and Grin may be exploring the potential of implementing MimbleWimble design, perhaps in different technical ways. While Beam uses the Mimblewimble protocol to reduce blockchain bloat and improve scalability, Grin uses it to extract data from past transactions that could load its platform if that data were kept on a chain.
At present, however, uncertainty remains as to whether Mimblewimble will take on a significant level, especially given that it tends to lead to regulatory compliance issues. However, the idea is very young and probably also very promising.