While the intergovernmental organization’s guidelines are not legally binding, their recommendations gave the crypto community a look at what future regulations may look like. OKEx Korea, who decided to adhere to the guidelines, implemented the ‘travel rule’ and decided to delist 5 privacy coins, including Monero, Dash, and Zcash.
Privacy coins fell victim to the travel rule
The controversial June cryptocurrency guidelines posted by the FATF (Financial Action Task Force) included several severe requirements for VASPs (virtual asset service provider), one of them being a ‘travel rule’. According to the rule, VASPs are required to collect all customer information on crypto transactions, including data such as location, transaction sender’s name, account number, and the receivers name.
Cryptocurrency assets that are privacy-oriented, such as Monero, ZEC, Dash, and others, prevent exchanges from knowing the mentioned information as they use cryptographic mechanisms to enable advanced privacy measures. As OKEx Korea decided to comply with FATF’s crypto guidelines, the exchange decided to remove all listed privacy coins.
To adhere to the travel rule, OKEx Korea announced in their blog post that five cryptocurrencies would be removed from the exchange, including Monero (XMR), Dash (DASH), Zcash (ZEC), Horizen (ZEN) and Super Bitcoin (SBTC).
What the future will hold for Monero & Co.
At the time of writing, only the regional Korean exchange made the move to delist privacy coins while they are currently still available on the global platform. However, the decision could have been made if the Korean government obligated all cryptocurrency exchanges to follow global regulatory guidelines.
As some crypto businesses and nations such as Switzerland have actually listened to FATF’s new rules, we can expect more to follow in the near future. Exchanges that are interested in features such as fiat deposits and withdrawals are required to adhere to certain regulatory frameworks in order to allow such activities.
If policymakers were to shift their focus towards privacy coins, we may see several exchanges delisting such assets. This event would have a severe impact on the market, by either significantly increasing the price of privacy coins due to their utility, or by significantly decreasing the price due to low liquidity and volume. In either case, delisting privacy coins would set a precedent, as it could lead to the removal of other categories of altcoins.
FATF is an important entity for fighting terrorism financing and anti-money laundering and it has representatives from 36 countries. However, their guidelines are not legally binding and are only seen as recommendations.