Regulations and delistings of the stock exchange call into question the future of private cryptocurrencies

Regulations and delistings of the stock exchange call into question the future of private cryptocurrencies – Mail Bonus

The core principles of cryptocurrency were based on financial independence, decentralization and anonymity. However, as regulations are the key to mass adoption, the privacy aspect of the cryptocurrency market seems to be at risk.

By 2022, even though no specific country has a comprehensive regulatory framework governing the entire cryptocurrency market, most countries have implemented some form of legislation to govern some aspects of the cryptocurrency market such as business and financial services.

Although different countries have set different rules and regulations in accordance with their current financial laws, a common theme has been the strict implementation of Know Your Customer (KYC) and anti-money laundering (AML) regulations.

The majority of cryptocurrencies licensed by the government or related parties have averted any anonymous transaction. Even in countries where there are no specific laws on personal currency, private trade is prohibited above certain thresholds.

The governments of the United States and the United Kingdom have also demanded control measures against the use of coin-operated devices, services used to cover the origins of trade by confusing them with many other transactions.

Coinjoin, a popular cryptographic mixer, recently announced that it would block illegal trade in heat in regulations.

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Litecoin (LTC)’s recent delisting of several cryptocurrencies in South Korea due to a recent MimbleWimble update aimed at privacy is another example of how the cryptocurrency’s privacy component is the first to fall on the way to adopting rules. In addition to the South Korean stock exchanges that delisted LTC, many international exchanges, including Binance and Gate.IO, also refused to support trading with the MimbleWimble update.

Most regulations focus on making cryptocurrencies more transparent so that consumers and businesses feel comfortable with them. This could be good news for institutional and corporate investors, but it could be a shock for a currency aimed at privacy.

At a time when supervision is at its peak, there is a particular threat to privacy currencies such as Monero (XMR) and ZCash (ZEC), which are already banned on some leading exchanges. However, experts believe that despite the ongoing anti-privacy issues, people will continue to use them.

Privacy tokens are a red flag for many regulators, who often want blockchain transactions to be reviewable, verifiable and carried out on a public chain.

In oversight oversight worldwide

Privacy currencies cover key transaction identities, such as the address of the sender or recipient, a feature that regulators believe may be misused by intruders. Even some nations like Japan, once considered a leading country in terms of progressive cryptocurrencies, decided to abandon the currency of privacy.

Japan banned the use of cryptocurrencies with an emphasis on privacy in 2018, after which several registered cryptocurrencies in the country deregistered privacy currencies from their territory. Similarly, South Korea has not only banned personal currency, but all forms of private trade are banned in Korean cryptocurrencies.

In the United States, privacy currencies remain legal. However, the secret service recommended that the parliament establish rules on cryptocurrencies that increase privacy.

In August 2020, Australian regulators forced many stock exchanges to delist personal currency. The Financial Action Task Force (FATF) has similarly listed the use of privacy coins as a potential red flag for money laundering through virtual assets.

Some cryptocurrency exchanges have also stopped offering privacy currencies due to the AML guidelines. In January 2021, Bittrex, the eighth largest cryptocurrency exchange by volume, announced that it would release Monero and Zcash from its platform. Kraken, the fourth largest stock exchange, delisted Monero in the UK in November 2021 following instructions from UK financial market regulators.

Ankit Verma, Chief Investment Officer at Mudrex Cryptocurrency Investment, told Cointelegraph:

“Although some exchanges regularly prohibit the trading of privacy currencies, most of the largest privacy currencies are now available for trading on major stock exchanges in different jurisdictions. However, institutions’ doubts about the introduction of privacy coins persist. It is difficult to predict the use of privacy coins on a broader scale, primarily due to the strict implementation of KYC and AML guidelines. Our belief is that the lack of institutionalism for privacy coins, together with the fact that they are ungovernable, further reduces the possibility of widespread adoption of personal coins.

Regulatory pressures have increased to the point where even the privacy features of certain cryptocurrencies are under scrutiny, even if the cryptography itself is not solely focused on privacy. Thus, experts believe that real winners will be those who combine the best of privacy and compliance.

Fennie Wang, CEO of Humanity Cash – a societal currency development platform – told Cointelegraph:

“The winners will be protocols that strike a balance between users’ privacy and compliance with regulations using a combination of cryptographic technology and sound policy translation. Decentralized identity primitive along with zero-knowledge evidence, homomorphic encryption and multi-category calculation will be the focus of this equation.

Can privacy coins survive the surveillance attack?

Privacy coins are still in the gray area in some countries where they are not banned but the government has prevented their use.

Chris Kline, Chief Operating Officer of the Bitcoin IRA – which provides a cryptocurrency retirement plan – believes that privacy currencies can be parallel despite the current regulatory downturn. She explained:

“Privacy coins can be a parallel to the surveillance environment. This coexistence will take place in parallel with new rules and challenges as the CFTC takes the lead on standards ahead.

Many other experts believe that although privacy currencies have difficulty obtaining regulatory approval, regulators will become more complex with respect to privacy currencies and bring them under their control.

Nikos Kostopoulos, blockchain consultant at NetCompany, the European Union’s IT infrastructure company, told Cointelegraph:

“While it is foreseeable that privacy currencies may not have a place in regulated cryptocurrency exchanges, privacy currencies will not evaporate from market value, but will find audiences and places where privacy is fundamental while regulators become more complex with their approach to privacy. with KYC / AML levied when trading fiat currencies or cryptocurrencies.

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Privacy is still a major concern for many in the cryptocurrency community and these concerns are growing when it comes to sensitive information such as financial transactions. This is why privacy currencies are so important to preserve and secure the interests of users. They ensure that sensitive user data is not accessible to anyone and that business is done privately. Some privacy currencies such as Zcash and Dash (DASH) allow users to choose whether or not to encrypt their transactions, giving them complete control over their data.

Many reports have shown that less than 1% of cryptocurrencies report crime and cash is still a currency of convenience for criminals. Given all these positive aspects of privacy currencies, declaring a complete ban on them could pose a threat to users’ privacy and ultimately the technology behind it.