It looks like Japan’s Financial Services Agency (FSA), has been putting pressure on cryptocurrency exchanges in the country to delist privacy-focused coins such as Monero (XMR), Zcash (ZEC), and Dash (DASH), which tend to be popular with criminals since transactions involving such currencies are much harder (if not impossible) to trace.
According to a report in Forbes, their sources, which apparently have a close connection to the FSA, are saying that the FSA is taking all possible steps to discourage the use of such currencies. In the early days of Bitcoin, it was thought by many that Bitcoin transactions were more or less untraceable, and so tech-savvy criminals started using it for illicit activities. Then, in October 2017, the European Union Agency for Law Enforcement Cooperation, better known as Europol, released a report that said that although Bitcoin was still being used by criminals, “monero, ethereum and zcash” were “gaining popularity within the digital underground.”
Understandably, the Japanese authorities are frustrated that they can’t easily identify the recipient in a transaction involving a privacy coin “via a blockchain or other public ledger.” In crimnal investigations, one of the golden rules is “follow the money” and when you have anonymous money transfers, it makes the job of the poor investigators much harder.
Coincheck, the Japanese cryptocurrency exchange, which lost more than $500 million (around 523 million NEM coins) in a hacking attack on 26 Jan 2018, decided to drop Monero, Zcash, and Dash around the 17th of March 2018, presumably to co-operate with the FSA because it is believed that the hackers took the stolen NEM and converted it to some privacy coins on an underground crypto exchange, which then made it much easier for them to launder the stolen money.
The Forbes article says that since Coincheck got hacked, the FSA has been increasing its inspections on all crypto exchanges operating in the country, telling them that they need to apply to be registered, and that dealing with these privacy coins would make it harder for them to get registered. It goes on to say that on 10 April 2018 , in a working group meeting of cryptocurrency experts organized by the FSA, Monero and Dash were specifically named as being potential tools for money laundering, and that one member commented that they should discuss “whether any registered cryptocurrency exchange should be allowed to use such currencies.”
Of course, if the FSA decides to go ahead and ban trading of privacy coins on crypto exchanges in Japan, this could prompt the regulatory bodies in other countries to do the same to their local exchanges, which could could have a significant negative impact on the prices of these cryptocurrencies.
Featured image credit: “P2110099” by “Zengame” is licensed under CC BY 2.0
