Definition ∞ Non-Custodial Mixing refers to a privacy-enhancing technique where digital assets are combined and redistributed among multiple participants without any single entity taking control of the funds. This process aims to obscure the transaction history and break the link between sender and receiver, thereby increasing transactional anonymity. Unlike custodial mixers, this method maintains user control over assets throughout the mixing process, reducing counterparty risk. It relies on cryptographic protocols to achieve privacy.
Context ∞ The debate surrounding Non-Custodial Mixing protocols often involves regulatory scrutiny concerning their potential use for illicit activities, despite their privacy benefits for legitimate users. A key discussion centers on balancing individual financial privacy with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. Future developments may include innovations that offer verifiable privacy while still providing mechanisms for regulatory compliance, addressing concerns from financial authorities.
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