Japan’s Financial Services Agency is gunning for privacy coins like Monero and Zcash.
Following the largest ever recorded cryptocurrency exchange hack, in which over $500 million in NEM tokens were stolen from the Japan-based exchange Coincheck, Japan’s Financial Services Agency (JFSA) has been tightening its regulatory grasp on all exchanges in the region. After the JFSA called for increased security and better infrastructure, they began issuing warnings and suspending exchanges for lack of compliance, causing other exchanges to close up shop rather than adhere to the new, strict conditions. Now, the JFSA is reportedly asking exchanges to de-list privacy-focused altcoins.
According to a report from Forbes, sources close to the matter state that the JFSA is “taking all available steps” necessary to apply pressure to local exchanges to remove specific privacy-centric altcoins – such as Monero, Zcash, Dash, Verge, and many more – from their platform’s offering.
The FSA believes that because these cryptocurrencies are much more difficult to track due to their anonymous nature, that they are too often closely connected to criminal activity. Criminals use privacy coins in an attempt to cover their tracks and avoid detection. One such example is where criminals hijack user’s computer resources via malware that is used to mine for cryptocurrency – typically Monero – due its ease-of-mining and anonymity.
While there currently is no official legal stance against privacy coins in Japan, it is worth noting that Coincheck – who has been under the JFSA’s microscope since the hack in January – delisted Monero, Dash, and Zcash without advanced notice last month.
Last week, top exchanges in the region came together to form a self-regulatory body named Japanese Cryptocurrency Exchange Association that, in cooperation with the JFSA, will develop industry standards and provide operational guidelines for local exchanges. Considering the JFSA’s distaste for privacy-focused altcoins, their delisting will likely be an important topic of discussion for the newly established Japanese Cryptocurrency Exchange Association, and we expect more news in the coming months related to privacy coins in Japan as regulations are proposed.