Binance was wrong to boot Monero, ZCash and other privacy coins

In May, Binance proclaimed that various privacy coins, including Monero (XMR) and Zcash (ZEC), would be delisted in numerous countries, including France, Italy, Spain, and Poland. This decision highlighted the fact that some organizations might restrict privacy technology, even when it is lawful, out of a mix of risk aversion and compliance perplexity.

Some Monero users have long advocated that their tokens should not be kept on exchanges, arguing that on-exchange transactions can compromise user privacy as personal identification information is needed. However, there are benefits to listing privacy coins on exchanges as well, such as aiding in new user acquisition, increasing liquidity, and sparking price movement.

European Union regulators have recently introduced two major crypto legal frameworks: Markets in Crypto-Assets regulations and a Travel Rule. These mandates require the collection of user data and identification details for those receiving withdrawals. Although these regulations may seem onerous, users of privacy coins and exchanges listing privacy coins can, in fact, comply.

Are we still angry with MetaMask and ConsenSys for spying on us?

Zcash is an example of a cryptocurrency that provides a transparent send function and the ability to privately share view keys in shielded transactions. Monero has a comparable view key feature. Although there are talks amongst EU representatives about a potential ban on privacy coins, it is still in its infancy.

Binance’s reaction appears to be disproportionate and not based on any specific regulatory direction, and furthermore, it appears to be contradictory. For example, they removed Secret’s SCRT governance token, which is not a private asset but can be exchanged for a private coin, yet Litecoin (LTC), which has a privacy component, has not been taken down.

It is possible that Binance’s actions have less to do with European regulators’ requirements and more to do with its own specific situation. For example, Binance is presently involved in a legal battle with the Commodity Futures Trading Commission concerning claims of not abiding by necessary Anti-Money Laundering regulations.

Even in countries where the use of privacy coins is prohibited, such as the United Arab Emirates, tech-savvy individuals can still obtain them via virtual private networks to facilitate peer-to-peer transfers or decentralized exchanges. Platforms like Sideshift.ai for Zcash and Bisq for Monero provide access to these privacy coins. While these methods ensure that these coins can still be used during bans, it may impede the wider adoption of these coins, which are essential for financial security and the protection of human rights.

The crypto industry should stay away from replicating “Operation Choke Point,” a policy where the US government discourages banks from working with crypto customers due to regulatory pressures. Crypto exchanges should not prohibit privacy coins unless legally required, so as to not create their own chokepoint.

Exchanges that are regulated are able to adhere to U.S. Anti-Money Laundering regulations – for example, Kraken, which offers Monero, and Gemini, which not only provides Zcash but also allows customers to make shielded transactions on its platform.

Privacy tools in the realm of cryptography are simply that— tools. They are employed by both the average user and, in certain cases, those with malicious intent. However, this does not signify that the tools themselves are inherently wrong. Just like cash or the internet, these tools can be utilized for both legitimate and unlawful activities. It is essential to distinguish between the tool and how it is utilized.

Infura is responsible for MetaMask’s breaking of the cryptocurrency ethos.

It is essential to create a well-balanced regulatory framework that safeguards users’ privacy and at the same time deters and penalizes unlawful activities, as the crypto industry is still in its infancy. Imposing overly stringent regulations could hamper innovation and put off potential users from entering the crypto arena.

Privacy is a fundamental human right and an integral part of the crypto ecosystem. It is essential that regulatory bodies and crypto organizations collaborate to create a regulatory framework that respects and safeguards user privacy while also adhering to laws and regulations. This will ensure the crypto industry has the potential for long-term development and expansion.

Binance should reverse its decision to delist privacy coins, closely adhere to the compliance regulations of EU countries, and even more, get involved in speaking out against the potential ban of privacy coins by the EU. As privacy continues to be a pivotal part of crypto, exchanges such as Binance will be left behind if they do not take privacy coins and tools seriously.