Privacy coins are facing a threat to their existence as the regulatory noose tightens.
Monero, Zcash, Dash, are some popular privacy-focused cryptocurrencies that obfuscate transactions, making it harder for exchanges and custodians to comply with the new international guidelines aimed toward preventing illicit financing.
The exchange will remove support for these coins on October 10, while withdrawal services will end on Dec. 10.
The reason behind the same is a violation of the Financial Action Task Force (FATF’s) “travel rule.”
In June, the FATF issued the final guideline on cryptocurrencies that requires exchanges to collect and transfer customer information, including account number, location, beneficiary’s name, and account number, during transactions.
Because privacy-oriented coins do not allow collecting such information, the exchange ended the support for the coins.
Before OKEx, UK-based crypto exchange CEX.io delisted privacy coins Zcash and Dash on the account of “global regulatory and compliance developments.”
Coinbase UK also removed support for Zcash but that move was likely to do with its new banking partner ClearBank.
Most recently, another Korean exchange, Upbit announced that it will stop providing support for Monero, Dash, Zcash, Haven, PIVX, and Bittube, starting Sept. 20.
A Fundamental Right
However, the developer team behind these privacy coins say they can be in full compliance with FATF’s rules.
While Monero shows no history of transactions, it has a “view keys” feature. Meanwhile, Ryan Taylor, CEO of Dash Core Group said, “Dash is identical to Bitcoin and is 100% capable of meeting the requirements.”
In this privacy coin delisting spree, Binance has been adding support for them, the latest one at its lending business.
“Do you think privacy is a fundamental right?”
Changpeng Zhao, Binance founder said at that time.
Prices Take a Hit
According to Coincodex, delisting has been hurting the prices of these coins.
“It’s certainly seen as creating a huge hurdle to the existence of privacy coins,”
Jesse Spiro, the head of policy at crypto investigative firm Chainalysis Inc told Bloomberg this week.
In the past 3 months, Zcash went from $117 to $44, seeing a loss of over 62% while currently trading at $46.39.
During the same period, Dash prices tumbled from $190 to $79 but recently gained momentum and climbed above $90, still down more than 50%.
As for Monero, in June it was trading around $115 that started September below $70 and is currently trading around this level only.
Spiro anticipates more exchanges to drop privacy coins while Jeff Dorman, chief investment officer at Arca said,
“There is a good chance many will be delisted and liquidity will dry up.”