Leading cryptocurrency exchange OKX has announced its decision to delist 20 spot trading pairs in the new year.
Among the tokens listed are several privacy-focused cryptocurrencies, including the three largest: Monero (XMR), Zcash (ZEC), and Dash (DASH). The exchange has already stopped depositing these crypto assets, and trading will be halted on January 5th.
Friday's announcement did not specify the rationale for the delisting, other than that it was “based on user feedback” and that the token “does not meet our listing criteria.”
Other crypto assets that are not privacy coins are also scheduled to be delisted. Blockworks asked for clarification on the exchange's policy.
Customers have until March 5, 2024 to withdraw these assets.
Leading cryptocurrency exchange Binance has been working on policies surrounding privacy coins, announcing its decision to delist several prominent coins in May and then withdraw them in June.
read more: Binance reverses delisting of privacy coins in some EU countries
Privacy coins as a category have been a source of tension between the cryptocurrency industry's core tenets of privacy and anonymity and the increasing pressure to comply with global regulatory standards.
Privacy coins are designed to provide greater anonymity than other cryptoassets, such as Bitcoin, by obscuring transaction details such as transaction parties and amounts.
But this very privacy-enhancing feature has come under intense scrutiny from regulators around the world, who are concerned that the technology underpinning these assets may be susceptible to illegal activities such as money laundering, terrorist financing, and sanctions evasion. They are concerned that it could be misused.
In response to these concerns, virtual currency exchanges are caught between the legitimate demands of their customers to protect their privacy rights while complying with the laws and regulations governing financial transactions around the world.
For example, the European Union's Cryptoassets Market Regulation (MiCA) states: Cryptoassets and their trading history may be identified by cryptoasset service providers operating cryptoassets trading platforms. ”
Technical solutions are available to meet this obligation, which is mandated by December 2024, but require collaboration between privacy coin developers and crypto exchanges. For example, the Zcash community has been discussing options in public forums for several months and has proposed four solutions.
According to community member aquietinvestor, Binance rejected these proposals.
“The only course of action available is to implement an “exchange-only” address type. Failure to do so will result in ZEC being delisted from the Binance Exchange. “Binance has given us until February 29, 2024 to comply,” they wrote on Tuesday.
Zcash has two types of addresses: transparent (t-addresses), which are similar to Bitcoin addresses, and shielded (z-addresses), which provide strong privacy protection.
“Exchange Only” addresses are “transparent” and do not offer the privacy features of a Z address, but may be required by an exchange for deposit and withdrawal transactions.
Blockworks has reached out to Binance for comment, but has not yet received a response.
Based on recent trading volume figures, the practical impact of OKX's decision is likely to be limited. According to CoinGecko, OKX's largest XMR trading pair has a 24-hour trading volume of approximately $2.5 million, while its ZEC trading pair has a total of approximately $7.5 million, which is about half of Binance's trading volume.
However, the move reflects a major shift in the crypto landscape, with exchanges increasingly prioritizing regulatory compliance.
Finding ways to balance privacy and preventing abuse of privacy-preserving technologies is an ongoing focus of research in the cryptocurrency industry.
read more: Privacy is paramount and zero-knowledge encryption is the way to go
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