Danger for Privacy Coins: Liquidity Plummets and Binance Could Delist ZCash and Monero

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Privacy-focused cryptocurrencies, such as Monero (XMR) and Zcash (ZEC), are currently at a crossroads due to increasing regulatory pressure and actions by prominent exchanges, especially Binance. The situation escalated when OKX delisted several privacy-focused trading pairs on January 5, citing non-compliance with their listing criteria. Subsequently, Binance added a monitoring tag to Monero, Zcash, Firo, and MobileCoin, warning that tokens with this tag may no longer meet their listing criteria and could be removed from the platform.

This move had a tangible impact on the market, with Zcash experiencing a 19% drop in the last week, and Monero also facing a 3% decline. In addition to price effects, the liquidity of these cryptocurrencies reached historically low levels, according to data from Kaiko.

Regulatory pressure is a primary driver behind these exchange decisions. Privacy-focused cryptocurrencies, by concealing sender details and transaction history, are under scrutiny from regulators worldwide. This privacy-centric approach, once a central feature in the early days of cryptocurrencies, now faces significant challenges.

Binance, as one of the world’s leading exchanges, is compelled to implement stricter anti-money laundering controls and conduct thorough identity verifications due to its guilty plea in November for violating U.S. banking laws and paying a $4 billion fine.

The potential delisting of Monero and Zcash by Binance, with a daily trading volume of $15 billion, poses a substantial challenge to these projects, jeopardizing their market position with a combined market capitalization of $3.48 billion.

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Zcash and Monero Attempt to Avoid Binance Delisting

In an effort to avoid delisting, some projects are exploring innovative solutions, such as creating cryptographic addresses exclusively for exchanges. This proposal, involving users creating a new transparent address to send funds to a platform, was suggested as a way to comply with Binance’s regulations. However, there is resistance in some projects, like Monero, which refuse to comply with these requests.

Discussions about these solutions and their implementation are generating intense debates in the Monero and Zcash communities. The hope is that these solutions meet Binance’s requirements and prevent delisting, providing the exchange with the necessary transparency regarding the deposit address history.

The crypto industry is constantly evolving in terms of regulation. Adaptation and the search for creative solutions become imperative for privacy-focused cryptocurrencies. The current situation underscores the importance of discussing the extent to which these regulations can advance.


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