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European cryptocurrency exchange Bitbay recently announced that it would stop Monero (XMR) trading on its platform. The move is inspired by the anonymity feature of the cryptocurrency.
What did Bitbay say?
The exchange told its users,
“Monero (XMR) can selectively utilize anonymity features among projects. This feature of XMR is a subject to the end of transaction support.”
It added that the decision was crucial to block money laundering and inflow of cash from external networks. It cited other fiat-crypto exchanges that have dropped Monero for similar reasons in recent times.
The exchange said that it has to follow the standard practices in the market and added,
“Compliance with market standards and regulations allows us to provide our clients with legal security and convenience of using the exchange, with the participation of a friendly banking system and the availability of payment operators.”
Starting Friday, November 29, the exchange will stop accepting support for the privacy-focused coin. Trading in the coin will end on February 19, 2020. Users will be given a window till May 20, 2020, to withdraw their XMR coins from the platform.
Why is anonymity such a big concern?
Bitbay was founded in 2014 in Poland and has over 800,000 users. Last year, the exchange shifted to Malta owing to its more supportive cryptocurrency legislation. However, it is not the first company to shy away from XMR trading. Coincheck, a Japanese exchange, stopped trading three privacy-centric coins- Zcash, Monero, and Dash in early 2018. Coinbase listed Zcash in its UK-focused platform but removed it in August. In September, Okex also removed several privacy-coins from its platform.
Privacy-focused coins obscure user information more than the pseudonymous Bitcoin network. Governments often force exchanges to shun their coins because of their anonymity, which could be used by bad actors in the industry for money laundering or terrorism financing. Exchanges fear that they will not be able to carry on their operations or face termination of banking services if they do not comply with standard practices.
The Financial Action Task Force (FATF), Europol and central bankers around the world do not support privacy coins. They argue that these coins can be used for criminal activities. However, privacy advocates suggest that these arguments are invalid and that the financial system is designed to make privacy limited, if not impossible. Cryptocurrencies are already outside the purview of central banks since they are not controlled by a single entity.