Binance Contemplates Delisting Privacy Coins Between Compliance Concerns

There have been rumors circulating in the Zcash community recently that the massive cryptocurrency Binance may be preparing to perform a thorough analysis of privacy currencies listed on its platform, which might result in the delisting of some assets. Since November 2023, Binance has been holding talks with representatives of privacy coin projects. Given the upcoming introduction of MiCA, questions have been raised over compliance.

Reportedly, Binance—which has the distinction of being the biggest cryptocurrency exchange in the world—has voiced concerns about its capacity to track the source of funds in specific Zcash transactions. The exchange is concerned about the difficulty in identifying the source address of individual Zcash transactions, which creates challenges in verifying that the money do not originate from an address that has been identified by the Office of Foreign Assets Control (OFAC).

Jason McGee, a member of the Zcash community grants, has been actively engaged in discussions with Binance since November 2023. In a recent meeting with the exchange, where proposals to avert delisting were rejected, McGee disclosed:

“Binance plans to evaluate the discussions they’ve had with various privacy coin projects, whether they plan to adhere to Binance’s requests, and then potentially delist some coins based on this review.”

Despite the Zcash team’s concerted efforts to collaborate with Binance and address compliance concerns, the looming possibility of delisting stems from what McGee perceives as Binance adopting a “hard stance” against privacy coins rather than a lack of viable solutions.

Awaiting a Decision by January 19

McGee and the Zcash team are expecting a decision from Binance by January 19 as the talks progress. The review’s conclusion may have a big influence on the exchange’s privacy coin situation, especially in light of Binance’s recent designation of some assets—like Zcash and Monero—as assets to be watched.

The changing environment brings to light the difficulties that privacy-focused cryptocurrencies have in managing exchange compliance requirements and regulatory expectations.