on the crypto
On December 8, Dutch cryptocurrency exchange LiteBit sent an email to its users stating that it would eliminate the privacy coin firo (formerly zcoin).
According to the email, the decision was made “partly due to the privacy policy of this cryptocurrency. The regulator of crypto companies in the Netherlands has signaled that cryptocurrencies aimed at privacy are too high a risk ”.
This news comes a few months after Shapeshift removed Monero, Zcash and Dash. South Korea-based exchange Bithumb also abandoned Monero (here quotation in real time) in June, confirming a trend of delisting of privacy coins by cryptocurrency exchanges that seems unlikely to stop anytime soon.
Delisting all over the world
Reuben Yap, Firo's project manager, said delistings have become a worldwide trend, especially in Asian countries such as South Korea and Japan. Europe, where privacy regulations, such as the General Data Protection Regulation (GDPR), would seem more open to privacy-centric coins, has seen French financial authorities recommend bans on privacy coins. Holland is also moving in the same direction as France. Monero has already been removed from the list in the Netherlands.
In Australia, cryptocurrency exchanges are removing privacy coins due to regulatory and banking pressure. US intelligence has urged Congress to limit the use of privacy-focused cryptocurrencies.
Why crypto exchanges remove privacy coins
The main reasons behind these revocations are the privacy features which are important to many cryptocurrency users. “The official reasoning of many countries is that these bans and revocations would help combat money laundering and the illicit use of cryptocurrencies.
However, this looks more like a facade, ”Yap said. He claims that the privacy coin delisting in Japan was triggered by nem's Coincheck hack, which has no privacy functionality. The hack was the result of too weak security policy of the exchange.
"As in many cases, it appears that privacy coins have once again been the scapegoat," Yap said. Korean exchanges have cited Financial Action Task Force regulations as a reason to remove privacy coins despite the fact that they do not present a problem with the FATF.
The impact on privacy coins
Withdrawal from exchanges raises privacy coin issues and signals other ecosystem players that it is recommended to remove them, even if there are no compliance issues. This has far-reaching effects. The delisting of small assets profoundly affects the profitability of these assets, lowering their liquidity to a critical level.
On the other hand, for consolidated privacy coins like monero, it simply pushes users "to trade in riskier and less compliant jurisdictions." As the Bitcoin and Ethereum blockchains are developing more privacy features, exchanges will have to contend with the necessary compliance processes that they may have tried to avoid by removing privacy coins.
