Regulatory approval appears to be a limiting factor for Coinbase, one of the world’s top cryptocurrency exchanges. In a recent appearance, the exchange’s chief executive, Brian Armstrong, revealed that they were holding off on listing privacy-focused asset Monero due to possible regulatory pushback.
Monero’s Tricky Situation with Coinbase
Armstrong made the revelation in a recent episode of the “What Bitcoin Did” podcast with Bitcoin commentator and analyst Peter McCormack. On the podcast, the exchange CEO explained that he was hoping to take a conservative approach to run Coinbase, thus helping the exchange pass the test of time.
Part of holding the conservative stand will be to cease interactions with Monero for the meanwhile. While Armstrong pointed out Monero’s outstanding security record, he explained that this wasn’t the right time to list the asset. In part, he added:
“I think with enough time and education, people will get comfortable enough with it. Privacy coins will become more mainstream over time I hope, and maybe more privacy solutions on Bitcoin too.”
Monero is perhaps the highest-profile, most valuable asset not listed on Coinbase. Data from CoinMarketCap shows that the asset is currently the 15th most-valuable in the crypto market, with a market cap of $1.3 billion.
Ironically, Monero’s blessing also appears to be its curse. The asset — as well as names like ZCash — thrives on the promise of providing optimal privacy levels, the likes of which large-cap crypto assets like Bitcoin and Ether don’t have.
This promise has so far become a boon for Monero, with the asset now seeing increased adoption from criminals and Dark Web players. Last October, Europol assessed internet-based organized crime. In its report, the law enforcement agency found that Dark Web criminal and website developers appeared to have been shifting towards privacy coins more.
“While we have previously reported a small shift towards more privacy-focused cryptocurrencies such as Monero, Bitcoin still remains the currency of choice for both legitimate and criminal use,” the report summarized.
Coinbase is Getting Chummy with Regulators
Given that law enforcement agencies are getting more adept at tracking Bitcoin payments, these criminals have adopted Monero as a means of safeguarding themselves. By listing the asset, Coinbase could be risking pushback from the government.
The move is in line with what appears to be a more cordial relationship between the San Francisco-based exchange and the government. Last month, industry news source The Block reported that the exchange was planning to sell analytics software to the United States Drug Enforcement Agency (DEC) and the Internal Revenue Service (IRS).
Citing public documents, the news medium claimed that the agencies wanted to purchase licenses for Coinbase Analytics, one of the exchange’s top web tools. While it’s unclear whether the deal went through, news of it sent crypto Twitter ablaze. Many began calling for a boycott of Coinbase. Josh Rager, a Bitcoin trader and commentator, conducted a poll on Twitter to see how many users would leave Coinbase if the deal went through.
The final results showed 7,421 respondents, with 46.3 percent claiming that they would delete their accounts. 23.3 percent claimed that they’d remain on the platform, while the rest said they had never used Coinbase in the first place.