Japan pressures exchanges to drop Monero, Zcash and Dash







The FSA—Japan’s equivalent to the SEC— are said to have discouraged exchanges from listing Monero (XMR), Zcash (ZEC) and Dash (DASH). These cryptocurrencies are often cited by authorities as being associated with the digital underground, where they are allegedly used for money laundering, drug dealing and other illicit activities.

Coincheck, the Japanese exchange that was recently hacked, is reported to have dropped the three covert cryptos in a bid to become more compliant with FSA regulations. The exchange applied for official registration with the FSA in September 2017, but had still not been approved when it was hacked. After a period of downtime, the firm has returned to action, but no longer offers trading in Monero, Zcash, or Dash.

The FSA is reported to have not only increased inspections of registered cryptocurrency exchanges, but also informed other applicants that dealing with these three cryptos would reduce chances of approval.

Monero the prime target

Monero, regarded by its adherents as the one true privacy coin, has been specifically singled out by regulators. The coin is commonly used by crypto-jackers, and drew the attention of the FSA after it emerged in January that North Korea may be using the practice to funnel funds to the dictatorship. It’s not surprising that Monero has attracted controversy, as its approach to anonymity makes transactions far more removed from prying eyes than its contemporaries—Dash and Zcash.

Whereas privacy is built into the very structure of Monero, it is only offered as an additional feature on Dash and Zcash, and the majority of Zcash transactions are actually public.

The rising sun shines brightly on Bitcoin

One of the first major economies to bestow legitimacy on virtual currencies, Japan’s proactive approach to regulation has put it at the bleeding edge of blockchain adoption. Like its neighbour South Korea, the country has reckoned with an unprecedented enthusiasm for cryptocurrency. Japan was the first to effectively legalize cryptocurrency when it recognized Bitcoin as a form of payment in April last year, and gave official approval to 11 cryptocurrency exchanges.

The country has been praised by the crypto-community for its progressive outlook but has also voiced concern over some of the dangers. The biggest cryptocurrency exchange in the world, Binance, was last year accused by Japanese regulators of trading without a licence, and refusing to verify the identities of users according to KYC (Know Your Customer) protocols. These factors, along with the trading of anonymous currencies, were cited as evidence that the exchange didn’t have effective measures in place to prevent money laundering.

While Binance was originally headquartered out of China, it has since fled local restrictive regulation and ended up in Malta. However, it does still have an office in Tokyo. Wise, perhaps, as Japan continues to spearhead development, and decisions made there can have an outsized global impact.

The future of privacy coins

Anonymity is perhaps the most equally contested and celebrated aspect of cryptocurrency—hitting right at the heart of the debate between personal freedom and national security.

Recent developments in Japan indicate a more stringent approach that might squeeze privacy coins into the less reputable corners of the web. With lawmakers internationally keeping a close eye on crypto moves by the Japanese legislature, the decision to sideline privacy coins there may have repercussions beyond its borders.

Banning the trading of these coins on exchanges could potentially force users to purchase them using unregulated or decentralised exchanges, which would further limit the opportunity to track covert transactions.

Maintaining one centralised point of purchase would at least enable transactions to be tracked to an extent, which could allow compliance with tax regulations. Certain cryptocurrencies, like Zcash, are designed with this in mind—allowing transactors to selectively ‘unshield’ their coins to disclose payments for auditing purposes.

If the aim is to diminish responsibility for the enabling of criminal activity, then regulation might create an artificial boundary preventing access to privacy coins. However, once the genie is out the bottle, you can’t put it back in. Prohibition is unlikely to completely eliminate the use of privacy coins, and could simply shift the alternative financial universe one step further from the reach of governments and banks.

‏Source bravenewcoin.com





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