**OPTIONAL** plain text transaction

[asbai]

We all know that when transferring XMR (or any other cryptocurrency) to a CEX, an anonymous transfer is of little significance, as the exchange will certainly know who you are and how much money you have received. Therefore, could an optional feature be added to allow users to use plaintext transactions when transferring funds to KYC-compliant custodial wallets, such as those used by CEXs (Off by default).

Meanwhile, since transfers between non-custodial XMR wallets would still maintain the default anonymity, this approach could potentially allow more CEX listings without compromising XMR's privacy protection.

[MalMen]

its not possible, the only thing you probably could make "public" was the steath address from where you are sending (not your main address), but even if that would be possible that would decrease the privacy for all the network

[asbai]

its not possible, the only thing you probably could make "public" was the steath address from where you are sending (not your main address), but even if that would be possible that would decrease the privacy for all the network

Are you suggesting that even if FCMP++ were fully implemented, or if we were to exclude the outputs of those plaintext transactions when generating RingCTs, a small number of plaintext transactions would still technically degrade the privacy of other normal (encrypted) transactions?

[jeffro256]

its not possible, the only thing you probably could make "public" was the steath address from where you are sending (not your main address), but even if that would be possible that would decrease the privacy for all the network

It is certainly possible: you just allow an input to specify the spent output directly and do a composition proof over that output and its key image. This has the same effect as a ring signature with 1 ring member. However, it's a bad idea for the reason you mentioned: it decreases the privacy for the rest of the network.

Use ownership and send proofs if you really need to prove that you originated the transaction.

[techmetx11]

If this was a implemented feature in Monero clients, then there is nothing stopping giant mining pools from refusing to mine transactions if they aren't "unprotected" (1 ring member, etc.), like what happened in Zcash with F2Pool.

[asbai]

If this was a implemented feature in Monero clients, then there is nothing stopping giant mining pools from refusing to mine transactions if they aren't "unprotected" (1 ring member, etc.), like what happened in Zcash with F2Pool.

Would it be possible to add some hard limits, such as a minimum number or proportion of regular encrypted transactions that must be included in each block? After all, our original intention is only for a small number of transactions going to CEXs to be completed in a compliant, plaintext form.

[nahuhh]

After all, our original intention is only for a small number of transactions going to CEXs to be completed in a compliant, plaintext form.

not happening. Monero is not now, and never will add "exchange addresses" or any other compromise.

edit: A stock exchange does not need access to my bank account balances or transaction history. Why should a crypto exchange need access to my wallet balances and history?

[asbai]

not happening. Monero is not now, and never will add "exchange addresses" or any other compromise.

Even if all CEXs delist XMR?

edit: A stock exchange does not need access to my bank account balances or transaction history. Why should a crypto exchange need access to my wallet balances and history?

As far as I know, this is a compliance issue: governments can demand detailed data (including balances and transfer records) of specified customers from banks when necessary. Governments are demanding the same data from exchanges. A growing number of exchanges are delisting XMR, which has an anonymous source of funds, to avoid non-compliance. We can't persuade governments across all countries to change their regulations, nor can we persuade every exchange to disregard those regulations, can we?

[jeffro256]

As far as I know, this is a compliance issue: governments can demand detailed data (including balances and transfer records) of specified customers from banks when necessary. Governments are demanding the same data from exchanges.

Hence why ownership / send proofs / key image association proofs exist, so that users can choose to disclose that data if desired.

A growing number of exchanges are delisting XMR, which has an anonymous source of funds, to avoid non-compliance. We can't persuade governments across all countries to change their regulations, nor can we persuade every exchange to disregard those regulations, can we?

At least in the USA, the requirements/means of enforcement for KYC/AML regulations when it comes to cryptocurrency are ambiguous, fickle, etc. We can't/shouldn't make protocol-level decisions for a global money system based on vague concepts of "non-compliance" when that means different things in different parts of the globe, and is not well defined within many large jurisdictions. Even if it were a well defined problem, it is my personal opinion that Monero shouldn't make any compromises on its core principles, which includes privacy and fungability.

[PPPDUD]

I think that a better idea would be a way to include a proof that a certain address sent a transaction in that transaction's tx_extra field. That way, exchanges could know for certain that you sent the money, but the exact details are only known to the exchange and you.

[asbai]

I think that a better idea would be a way to include a proof that certain address sent a transaction in that transaction's tx_extra field. That way, exchanges could know for certain that you sent the money, but the exact details are only known to the exchange and you.

This is indeed a better approach, but I'm just unsure if this will be enough to help XMR meet the compliance requirements in several key regions (e.g., North America, Europe, Japan, etc.).

[PPPDUD]

I think that a better idea would be a way to include a proof that certain address sent a transaction in that transaction's tx_extra field. That way, exchanges could know for certain that you sent the money, but the exact details are only known to the exchange and you.

This is indeed a better approach, but I'm just unsure if this will be enough to help XMR meet the compliance requirements in several key regions (e.g., North America, Europe, Japan, etc.).

To be frank, specifically attempting to meet compliance requirements is the definition of bowing down to the government. The people with the majority of Monero's hashrate (mostly privacy activists and botnet users) have a financial incentive to stop such updates, and they would probably perform a hard fork if this were implemented.

[asbai]

To be frank, specifically attempting to meet compliance requirements is the definition of bowing down to the government. The people with the majority of Monero's hashrate (mostly privacy activists and botnet users) have a financial incentive to stop such updates, and they would probably perform a hard fork if this were implemented.

Yes, the key is finding a solution that is acceptable to both parties. I believe what you just mentioned—the optional use of additional transaction information in tx_extra, encrypted with the recipient's public key (only enabled when sending to a CEX)—is an excellent approach. This is unlikely to provoke significant dissatisfaction among XMR users. At the same time, it may very well be sufficient to satisfy the AML regulatory requirements in many regions.

[jeffro256]

Why put it in the transaction extra???? Just send it to the CEX out-of-band if you really want to.

[asbai]

Why put it in the transaction extra???? Just send it to the CEX out-of-band if you really want to.

Because this requires the use of the sender's private key to prove the source of funds, it must be supported by the wallet itself.

[jeffro256]

You can sign any arbitrary message with your private spendkey in the CLI&GUI wallet.