Which features are used by anonymity-enhanced cryptoassets to reduce transparency of transactions and identities?

Anonymity-enhanced cryptoassets employ specific technical features to obfuscate the details of transactions and the identities of users to reduce traceability and increase privacy. These include:

Automatic mixing (B):This refers to mechanisms such as coin mixers or tumblers that combine multiple transactions from different users into one batch and redistribute them, breaking the direct transaction link and obscuring the audit trail.

Cryptographic enhancements (D):Techniques such as zero-knowledge proofs, ring signatures, stealth addresses, and confidential transactions are cryptographic protocols that conceal sender, receiver, and transaction amount information, making the blockchain ledger less transparent.

Other options explained:

Proof-of-stake mining (A)is a consensus mechanism and not related to anonymity features.

Secure hashing algorithm 256 (C)is a cryptographic hash function standard but does not directly enhance anonymity.

MetaMask wallet (E)is a non-custodial wallet used mainly for Ethereum and tokens but is not an anonymity tool.

References from official crypto AML guidance and typology papers:

DFSA AML Module and thematic reviews highlight these anonymity techniques as high-risk indicators requiring enhanced due diligence (EDD).

UAE typology papers and FATF virtual asset guidance emphasize the risk posed by anonymity-enhanced cryptoassets using automatic mixing and cryptographic enhancements to circumvent AML controls【AML/VER25/05-24: Sections 6.4, 7.3; 31.92._TFS_Typology_Paper_Eng__4.pdf】.