Japan has deprived anonymous cryptocurrencies of the right to be traded on the local market. Japan's financial regulator has completely banned anonymous digital assets since June 18, 2018, as expected after the unveiling of new rules for cryptocurrency exchanges.
The country, which once served as a beacon of hope for the development of blockchain-enabled initiatives in the region, has dramatically changed its position in recent months, rethinking the role that cryptoassets should play in Japan's commercial ecosystem.
Japan's Financial Security Agency (FSA) announced that an outright ban will come into effect on June 18 on all cryptocurrencies that provide a sufficient degree of anonymity for their end users.
For the most part, Japanese crypto platforms have begun delisting four major privacy coins - monero (XMR), Dash, Augura (REP) and zcash (ZEC). In early May, the Financial Services Agency (FSA) released a new five-point program, which is designed to effectively regulate the cryptocurrency market, as well as prevent new hacks of crypto platforms such as Coincheck, in January of this year. The fourth criterion that exchanges must meet, according to the new rules, concerns listing restrictions. A cryptocurrency that has a high level of anonymity makes it possible to use it for money laundering, the FSA notes.
As the crypto community begins to assess the consequences of this decision, it is becoming increasingly clear that the January hack on the Japanese crypto exchange CoinCheck, which led to the theft of 523 million NEM tokens (worth approximately $524 million), creating a major wave that will impact the future of the entire crypto space. However, while citing consumer protection and justifying their strict regulations with the infamous hack, regulators forget that anonymous cryptocurrencies were not involved in the Coincheck hack and that the rejection of private transactions undermines the entire essence of the cryptosystem.
For a platform to truly be considered “decentralized,” it must exclude the possibility of manipulation or control imposed by centralized organizations, which cannot happen without confidentiality.. Regulators are trying to ensure the safety of users, but what could result from abandoning algorithms that ensure complete confidentiality of transactions is still unknown.
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