Cryptocurrency Exchanges Binance Added “Watch Tag” to list of cryptocurrencies including privacy coins Monero (XMR), Zcash (ZEC), Horizon (ZEN) and Firo (FIRO).
In a statement, Binance said tokens with the watch tag “exhibit significantly higher volatility and risk relative to other listed tokens” and therefore “no longer meet our listing criteria” and are at risk of being delisted from the exchange.
The company added that tokens tagged with watch are subject to regular review, with criteria considered during the review including trading volume and liquidity, network stability and security, “contribution to a healthy and sustainable crypto ecosystem,” and “response to periodic due diligence requests.”
In a statement, Binance said that to trade tokens with the watchdog tag, users must pass a quiz to confirm they are “aware of the risks.” Other services related to listed tokens, including trading, will not be affected.
Other tokens with the watchdog tag include Aragon (ANT), Keep3rV1 (KP3R), Mdex (MDX), MobileCoin (MOB), Reef (REEF), and Vai (VAI).
Philo co-founder Reuben Yap said: Decryption The watchdog tag was applied to Firo and other privacy coins due to “increased regulatory pressure, including compliance with MiCA, recent efforts by U.S. regulators, and Binance's settlement with the U.S. Department of Justice.”
He said the project has been “in active discussions with Binance on this matter since September 2023,” and that the proposal to implement “exchange addresses,” a tool that would allow exchanges to maintain regulatory compliance while respecting user privacy, has been “favorably received” by the exchange.
Decryption We have reached out to Binance for comment and will update this article if the exchange responds.
Binance and Privacy Coins
Like cryptocurrency Bitcoin and Ethereum They use anonymous wallet addresses, and because their ledgers are public, transactions can be traced back once the addresses are linked to a user's identity. Privacy coins are a type of cryptocurrency that use encryption technology to protect identities from transactions, allowing users to transact anonymously.
Binance is working on listing privacy coins on its platform in some regions. In May 2023, the exchange announced it would delist several privacy coins, including Monero, Zcash, and Horizen, in France, Italy, Poland, and Spain, and then backtracked on some of the affected cryptocurrencies a month later.
However, many privacy coins, including Monero, are still affected by the ban, with Binance noting that it is “obligated” to comply with local regulations that require exchanges to “allow us to monitor transactions for coins listed on our platform.”
In September 2023, Binance announced that it would extend the delisting of privacy coins such as Monero, Horizen, and Philo to Belgium.
Privacy coins have long been under the scrutiny of U.S. regulators and law enforcement agencies, with the Internal Revenue Service (IRS) offering rewards to anyone who breached Monero’s privacy as early as 2020.
In a December 2020 proposed regulatory notice, the U.S. Financial Crimes Enforcement Network (FinCEN) noted that “anonymity-enhanced cryptocurrency” (AEC) protocols limit investigators’ ability to “trace transaction flows on distributed public ledgers” and have a “well-documented association with illegal activity.” The notice listed Monero as “a type of AEC.”
Binance’s decision to place a surveillance tag on privacy coins comes after the exchange opened its books to scrutiny by U.S. financial regulators and law enforcement following a multi-billion dollar settlement with the U.S. regulator.
Under the terms of the settlement, Binance will be subject to extensive oversight, including complying with regulators' “information requests” and retroactively filing suspicious activity reports (SARs) on its transactions from 2018 to 2022. The SARs will be provided to U.S. law enforcement. Former SEC attorney John Reed Stark described Binance's agreement with U.S. regulators as a “24/7, 365-day financial colonoscopy.”
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