In line with its efforts to stop money laundering and similar criminal activities, Japan’s Financial Services Agency is quietly putting pressure to cryptocurrency exchanges to drop Monero (XMR), Zcash (ZEC), Dash (DASH) and other cryptocurrencies favored by hackers and criminals. According to sources, the FSA confirmed they were taking all steps available to discourage the use of certain altcoins and cryptocurrencies that are widely used in the underworld due to their being difficult to track.
Last year in September, the European Union’s law enforcement agency Europol issued a report warning people against using “other cryptocurrencies such as Monero, Ethereum and Zcash” because they were “gaining popularity within the digital underground”. Criminals favor Monero and other “altcoins” over Bitcoin because they are less traceable.
Japanese authorities reveal it is very difficult, or almost impossible, to identify recipients of currencies like Monero via blockchain or other public ledgers. On the other hand, the blockchain for bitcoin allows seasoned investigators to track and trace the money. Cyber criminals are said to opt for the newer “privacy coins” when they demand ransom payments or engage in the exchange of illegal goods.
Coincheck, a Japense cryptocurrency exchange, used to handle Monero, Ethereum and Zcash before they were hacked on January. After completely returning to business, the firm stopped handling those three currencies altogether. Coincheck applied as a registered entity with the FSA last year in September following the newly revised laws on payment services. However their application was not approved at the time of the hack.
Just this March, Coincheck announced dropping transactions in Monero and two other untraceable cryptocurrencies. It was suggested that this move was part of the company’s attempt to show better compliance standards.
The FSA has stepped up their inspections on all operating registered cryptocurrency exchanges. The FSA has also warned other exchanges applying for registration that dealing with the said anonymous cryptocurrencies would be detrimental in their application.
The FSA is mostly against the use of Monero after it was reported that North Korea is mining the currency for fundraising.
To clarify, all three currencies are currently legally exchanged in Japan, but there is a huge possibility for trading in these currencies to be banned. The FSA could also just apply pressure on cryptocurrency exchanges to cease all trade with these coins in Japan.