The War on Privacy Coins Begins: Monero, Dash, ZCash delisted from Coincheck
Recently, Japanese crypto exchange Coincheck announced it will remove Monero, Dash, ZCash, and Augur from their coin listings by June 18th, 2018. The reason: compliance with government regulation.
One of the rules in the list said: “Those granting a high level of anonymity and easily used for money laundering will as a general rule be banned,”
Source: https://blockmanity.com/japanese-exchange-coincheck-delist-monero-zcash-dash-augur/
The conflict between privacy coins and government regulation is something that has concerned me for a while now, from a speculative/investment perspective. I think privacy coins offer great utility as day-to-day currencies. In an ideal crypto future, I would like to use a cryptocurrency like Monero for my daily purchases, like coffee, groceries, movie tickets, etc. Why? Because banks and credit card companies aggregate and sell your information, and a privacy coin offers you the benefits of being cashless while protecting your consumption behaviours from being monitored and monetized.
While that seems like a really obvious and useful thing to me, the anonymity offered by privacy coins conflicts directly with the concerns of government: it may help to enable tax evasion, money laundering, etc. So it shouldn’t be a surprise that governments will ban these coins from being traded on crypto exchanges, making it difficult for people to acquire.
This implies a decrease in demand for those coins, which is not great for purchasing power if you’re holding them.
However, some people believe the act of blacklisting a privacy coin will in fact increase its value the same way other black market goods become more expensive. When there is sufficient demand for goods/services that the government declares illegal (drugs, prostitution, as an example), the price for those things goes up, adding a premium for the risk taken by sellers. In this case, I think you have to be a bit optimistic in assuming the price elasticity for a privacy coin. I do not know how large of a segment of the market is willing to pay that premium. Unfortunately, the average person does not seem to value their privacy, and we can see that reflected in the somewhat muted response to the Snowden revelations, Facebook/Google data collection policies, etc.
Long run end game?
Crypto (and privacy coins) cannot be stopped. Fiat exchange for them can be hampered, but ultimately trading crypto-to-crypto can and will still occur. If we assume that privacy coins continue to be traded and used in a meaningful volume, we could see governments simply throw in the towel, allowing exchanges to use them, just so that they can collection whatever information and taxes they can.
I would compare this approach similar to the way governments are changing stances on marijuana (first it was illegal, then it could be used where prescribed by a doctor, and now in many places it is completely legal) or even sports gambling. Rather than waste resources trying to attack these things, better to just accept that people want them and tax it.
