From October 31, 2024, the cryptocurrency exchange Kraken will discontinue support for the crypto Monero (XMR) in all markets of the privacy token in the European Economic Area (EEA).
This choice will impact several trading pairs, including exchanges with United States dollars (USD), euros (EUR), Bitcoin (BTC), and Tether (USDT). The main reason behind this decision concerns the regulatory and compliance obligations that Kraken has stated it must adhere to.
The role of the crypto Monero (XMR) and Kraken’s choice
Monero, launched in 2014, is one of the most popular privacy tokens in the cryptocurrency landscape. Its main feature lies in the ability to offer a high degree of anonymity in transactions, which distinguishes it from cryptocurrencies like Bitcoin, where transactions, although pseudonymous, are traceable on the public blockchain.
Monero uses advanced technologies such as ring signatures and stealth addresses to ensure that transactions are completely anonymous, making it nearly impossible to trace the origin, amount, or destination of the money.
This feature has made Monero a preferred choice for users who wish to preserve their financial privacy. However, it has also raised concerns among regulatory authorities, who fear the use of Monero for illicit activities such as money laundering and financing terrorism. These concerns have likely contributed to the decision of Kraken to cease support for Monero in the EEA.
The regulatory context in the EEA
The regulation of criptovalute is becoming increasingly stringent in Europe and in the European Economic Area (EEA), an area that includes 30 member countries, including all the states of the European Union and Iceland, Liechtenstein, and Norway.
In particular, the anti-money laundering (AML) regulations and Know Your Customer (KYC) have become a central pillar for all cryptocurrency exchanges operating in the region.
The European Union has recently introduced the Markets in Crypto-Assets (MiCA) regulation, a legislative framework that aims to comprehensively regulate the cryptocurrency market. MiCA, along with other anti-money laundering laws, requires cryptocurrency exchanges to adhere to higher standards of transparency and traceability of transactions.
Monero, due to its intrinsically anonymous nature, does not align with these requirements, which explains the growing pressure on exchanges to remove support for this token.
Kraken cited these compliance obligations as the main reason for the discontinuation of support for Monero. Although the exchange has clarified that it will continue to support other cryptocurrencies in the EEA, the decision clearly reflects a trend of increased regulation affecting privacy tokens globally.
The impact of Kraken’s decision on the crypto Monero $XMR
The decision by Kraken to remove Monero will have a significant impact on traders operating in the EEA. Kraken users holding Monero will no longer be able to make new deposits or execute trading operations after October 31, 2024. Kraken has advised its clients to withdraw their funds in Monero before this date to avoid inconveniences.
This choice is not isolated. Other global exchanges have already taken similar measures, reducing or eliminating support for Monero in certain jurisdictions due to regulatory pressures. This could lead to a reduction in Monero’s liquidity in regulated markets, making it more difficult for users to buy or sell the token.
However, enthusiasts of Monero and supporters of financial privacy might find alternatives on decentralized platforms or on less regulated exchanges.
For example, DEX (decentralized exchanges) that do not require KYC checks might see an increase in the trading volume of Monero, given that such platforms are not subject to the same stringent regulations as centralized exchanges like Kraken.
The future prospects for Monero and privacy tokens
The removal of Monero from Kraken in the EEA raises broader questions about the future of privacy tokens in the era of increasing cryptocurrency regulation. Although Monero has a solid base of supporters who appreciate its ability to ensure privacy in transactions, its compatibility with new global regulatory standards is increasingly in question.
If regulations continue to tighten, we might see a further shift of centralized exchanges away from privacy tokens. However, the interest in financial privacy will not fade. We might witness the emergence of new technological solutions or cryptocurrencies that seek to balance anonymity with regulatory requirements.
In conclusion, Kraken’s decision to discontinue support for Monero in the EEA reflects a broader change in the cryptocurrency landscape, where regulatory compliance is becoming increasingly central. Monero and its supporters will need to adapt to this new reality, seeking alternatives to preserve privacy in the crypto ecosystem.
