The Financial Services Agency (FSA) of Japan is reportedly planning to force exchanges to de-list certain coins that are allegedly used for illicit activities. The three coins being discussed by the FSA are Monero, DASH, and ZCash— these are all privacy coins, meaning that they anonymize the financial movements of the people who use them.
The decision to discourage the use of these coins is rooted in their inability to be traced. The FSA seems uncomfortable with the idea of cryptocurrency being used without any monitoring as one of the main concerns they have had with exchanges in the past is with the lack of KYC (Know Your Customer) implementation. Since the Coincheck hack which saw $400 million NEM stolen, the FSA has been meticulous in making sure that digital assets do not fall into the wrong hands. Arguably, they have been too heavy-handed in their approach as they have led to several Japanse exchanges closing their doors or relocating.
The FSA has stated that handling or offering pairings for these privacy coins ‘would be detrimental to gaining approval,’ essentially meaning that they have been banned from being exchanged in Japan. This is the first large-scale ban of these coins, although investors have long feared that it could happen. The Monero community, in particular, is especially aware that their coin is vulnerable to harsh regulations. Of course, the decentralized nature of cryptocurrency means that, while governments can ban these coins from being listed on certain exchanges, they cannot stop them from being used fully since there is no central body which can cease their functions. This means that, should all privacy coins be outlawed, it may not endanger their price as they could still be traded on illicit markets. The FSA’s stance on these coins is bad news for Anonymous Bitcoin, a co-fork of ZClassic and Bitcoin, as it is currently in the process of trying to find exchanges to accept it.
It should be noted that, just because privacy coins are used for criminal activity, it is perhaps not a strong enough excuse for abolishing or restricting them since cash is also used for criminal activity. At their core, these coins allow people to move privately, without any form of prying eyes. To ban them is to make a statement against your citizens. The freedom to move without tracing should not be compromised for the thin argument of security and safety— privacy is a human right.
Currently, Monero, DASH, and ZCash are all still listed on Coincheck and other exchanges, but this could soon change in the coming days or weeks.