Why anonymous cryptocurrencies may disappear
Anonymity is one of the distinguishing features of cryptocurrencies. That’s, however, precisely what regulators do not like, and that casts doubt on the long-lasting existence of confidential coins.
A couple of weeks ago, a Korean
crypto exchange Upbit announced that it stopped working with anonymous cryptocurrencies. Monero, Dash, Zcash, Haven, Bittube and PIVX were hit. Starting September 30, users of the trading platform will not be able to use these assets.
Upbit made such a decision after the start of the investigation against anonymous cryptocurrencies in early September 2019. In particular, the cryptocurrency exchange was interested in whether the coins violate the new FATF recommendations on combating money laundering and terrorist financing.
“The decision to stop supporting trading in crypto assets was made in order to block the possibility of money laundering,” the crypto exchange claimed.
Moreover, Upbit is far from being the only platform that decided to leave anonymous cryptocurrencies “overboard”.
Mass delisting of anonymous cryptocurrencies
In early August 2019, the British subsidiary of Coinbase also decided to protect its business from problems with regulators. For that reason, the cryptocurrency exchange decided to ban the trading of the anonymous cryptocurrency Zcash.
Coinbase did not explain the reasons for that decision and Zcash said that the problem is not in regulation, because cryptocurrency is 100% consistent with all the rules in the UK.
Nevertheless, in late July, the country's financial regulator issued its recommendations. In particular, authorities have stated that some cryptocurrencies may be banned from working in Britain, including Zcash. This decision, however, did not undertake any legal obligations.
The project itself claims that only Coinbase customers were hit, trading on other British crypto exchanges will continue.
By September, another cryptocurrency exchange, OKEX, had fought against anonymous cryptocurrencies. In the middle of the month, the marketplace removed five of these coins from its listing: Monero, Zcash, Dash, Horizen and Super Bitcoin.
This time, the site provided comprehensive explanations for its actions. According to OKEX, these cryptocurrencies violate the laws and regulations in the country. To be precise, the matter concerns the FATF travel rule, which requires crypto exchanges to exchange information about their customers with each other.
In the case of anonymous cryptocurrencies, a cryptocurrency exchange supposedly cannot collect such data, and therefore it also violates the law. As such, the platform decided to remove coins from the auction in order to avoid sanctions.
Will be prohibited or not
Over the past 10 years, the crypto industry has come a long way. The market literally grew from zero to $215 billion in capitalisation. Cryptocurrencies are increasingly penetrating people's lives, and
blockchain technology is increasingly being used in the real economy.
In this regard, the authorities are beginning to pay more and more attention to cryptocurrencies. Therefore, regulation of this area is inevitable. The question remains only whether cryptocurrencies can retain their authentic properties - decentralisation and anonymity.