Market liquidity for Monero, Zcash hits all-time low, data shows

Reported from Crypto.new - Privacy tokens face challenges meeting crypto exchange listing criteria amid regulatory pressure, leading to an all-time low in liquidity, Kaiko’s data shows.

In a recent research report, analysts at Kaiko have revealed that market liquidity for privacy tokens — including Monero (XMR), Zcash (ZEC), and DASH — has reached all-time lows as crypto exchanges keep removing these assets from their listings.

According to data, privacy-focused tokens witnessed last week just $5 million in liquidity following the removal of several trading pairs with these assets from OKX.

“While trade volumes gradually increased since October, they are still well below their 2021 levels.”
- Kaiko

Analysts at Kaiko pointed out that privacy tokens have increasingly been delisted by major platforms due to regulatory pressure over the past few years.

This has helped to exacerbate the decline in liquidity during the crypto bear market. Both XMR and ZEC are currently at high risk of being delisted on Binance due to low liquidity, Kaiko notes, adding that ZEC has been the “most delisted privacy token over the past two years.” This has led to a greater fragmentation of the market, with XMR dominating on large exchanges, while ZEC and DASH are mostly traded on smaller unregulated venues, the analysts say.
In early January, crypto.news reported that Binance expanded the Monitoring Tag coverage with an additional 10 tokens, including Monero (XMR) and Zcash (ZEC). The move came amid increased attempts by Binance to bolster risk management after admitting to a litany of crimes in late 2023, including money laundering and failing to comply with know-your-customer (KYC) regulations stipulated by the U.S. Securities and Exchange Commission (SEC).

Despite the widespread delistings, not everyone in the crypto industry shares the same perspective. In September 2023, Ethereum co-founder Vitalik Buterin pointed out that centralized entities like custodial exchanges are “vulnerable” and can be corrupted, emphasizing that users should be able to transact directly on the Ethereum blockchain without relying on centralized providers.

Coinbase limits Zcash trading as ViaBTC poses risks of 51% attack.

Coinbase changed the Zcash confirmation requirement to 110 blocks, increasing deposit time from 40 minutes to 2.5 hours.

Crypto exchange Coinbase has limited trading with Zcash (ZEC) after it found that a single mining pool now controls more than 50% of Zcash’s hash power.

In a blog post on Sept. 15, Coinbase said it increased the number of network confirmations required for processing deposits and moved our ZEC trading markets into a limit-only mode to reduce the impact of any volatility.

Now, Coinbase waits for 110 blocks to be confirmed by the network, which means users would have to wait about 2.5 hours to deposit ZEC into the exchange.

According to data from MiningPoolStats, ViaBTC is now controlling 53% of the Zcash hashing power, while unknown entities control 18.3% and AntPool — 12.2%. Coinbase says it has reached out to Electric Coin Company (ECC), the team behind Zcash, and ViaBTC to reduce the risks of an attack against the network.

“We shared our concerns around the risks of mining centralization and provided recommendations for various options that either party could implement to reduce the risk of a 51% attack.”
- Coinbase

It is viewed as a mortal threat to the concept of decentralization. To launch a 51% attack, a person must control most of a network’s mining power and use that power to alter recorded transactions. However, large cryptocurrencies like Bitcoin (BTC) are incredibly difficult to attack because of the resources and hardware it would take.

As of press time, neither ECC nor ViaBTC made any public statements. Once a single miner or mining pool gets over 51% of the network’s hash power, it posts risks of the so-called 51% attack.

Privacy Coins: Huobi Delists Monero, ZCash, and Several Others.

Huobi Global has announced the termination of its trading service for several privacy coins including Dash, Monero, Verge, and others. The exchange says the move is in a bid to comply with financial regulations, according to September 12, 2022 statement.

Huobi Global, a Chinese digital assets exchange headquartered in Seychelles, has become the latest crypto market participant to wage war against privacy coins.

In a statement released by the exchange on September 12, Huobi revealed that it terminated the trading service of all major privacy coins on its platform on September 6. However, the official delisting will be made on September 19.

The affected privacy tokens are Dash (DASH). ZCash (ZEC), Monero (XMR), Verge (XVG), Decred (DCR), Firo (FIRO), and Horizen (ZEN). The exchange has made it clear that users will no longer be able to deposit the privacy coins into their Huobi accounts starting from 08:00 UTC on September 12, 2022, but withdrawal services will continue to function.

Huobi users are advised to cancel all open orders for the affected privacy tokens as soon as possible. Any open order as of the official delisting time will be canceled by the exchange and credited to the user’s spot account.

Regulatory Compliance

For the uninitiated, while privacy coins are also powered by blockchain technology, just like Bitcoin (BTC) and Ether (ETH), the key difference between regular crypto assets and privacy coins is that they (privacy coins) are designed to anonymize transactions of users, making them almost untraceable.

While the enhanced privacy protection feature of these digital assets makes it very hard for external entities to monitor the spending habits of holders or view how much money they have in their wallets, these same qualities make privacy tokens great tools for criminals, since law enforcement agents will need to spend much more time, and effort to track funds laundered via privacy tokens like Monero (XMR).

Huobi says its decision to stop supporting privacy tokens on its platform is part of larger plans to become more regulatory compliant.

“Huobi Global strictly complies with the compliance policies of every country and region and always endeavors to safeguard our users’ assets. In compliance with the latest financial regulations and in accordance with Article 17(16) of the Huobi Global Token Management Rules, Huobi Global has terminated the trading service of the following privacy tokens: DASH, DCR, FIRO, XMR, XVG, ZEC, and ZEN on Sept 6, 2022. The delisting of these tokens is scheduled to start at 08:00 (UTC), Sept. 19, 2022"
- stated Huobi.

Privacy coins have always been in the bad books of financial regulators across various jurisdictions, with a good number of crypto market participants left with no other choice but to delist them in recent times in order to remain regulatory compliant.

Just like privacy coins, crypto mixers have also been attracting serious regulatory scrutiny of late. As reported by crypto.news in August 2022, the United States Treasury Department sanctioned the Tornado Cash mixer citing links to the notorious North Korean hacking group, Lazarus.

Source : Crypto.news