Business 1 May 2018Erik Gibbs
Japan pushes exchanges to drop altcoins favored by criminals
What do Monero (XMR), Dash (DASH) and Zcash (ZEC) all have in common? Apart from being rising altcoins, they’re three cryptocurrencies being targeted for removal from Japan’s cryptocurrency exchanges. That is, if the Financial Services Agency (FSA) has its way.
The FSA has quietly begun to put pressure on crypto exchanges to remove the digital currencies, assumed to be favorites for individuals looking for ways to launder money and to participate in other criminal activities. The FSA has begun to take measures designed to discourage trading on the exchanges of the altcoin. The decision comes, in part, following a report by Europol last September that highlighted the tokens as the favorites among the filchers.
The seedy underbelly of the cryptocurrency world is said to target the altcoins because they’re less traceable than others, such as Bitcoin (BTC). Many have accused the entire cryptocurrency industry as being a haven for criminal activity, a hypothesis that has been shot down by hard evidence.
The FSA asserts that it is virtually impossible to identify the source and destination information of transactions conducted over the altcoins’ blockchains, making them perfect for nefarious activities. Unlike BTC with its public ledger, they argue, investigators can’t follow the virtual paper trail in transactions conducted over several other blockchains. The agency points out that cyber criminals are increasingly turning to the altcoins when they conduct illegal sales or demand ransom payments.
Japan’s Coincheck cryptocurrency exchange was hacked on January 26, resulting in operations being suspended temporarily. After Coincheck came back online, it had removed the options to trade in XMR, DASH and ZEC by March. The FSA has warned that, while the coins aren’t prohibited, dealing in them could result in license applications being denied.
Following the January hack, which resulted in the loss of $534 million in cryptocurrency, the FSA cracked down on exchanges and implemented more stringent regulations. It ordered two cryptocurrency exchanges to shut down in March, and issued “business improvement orders” to five more.
BTC has been legal tender in the country since April of last year, but the move by the FSA this year has hampered future growth. Several exchanges and blockchain companies have already left the country; with others announcing that they were exploring their options.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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