Governments are starting to embrace digital currencies, such as BTC and ETH. However, many of them are strongly against using privacy coins like Monero and ZCash because they are harder to regulate.
As a result of the latest government regulations, such as Anti-Money Laundering (AML) and Know Your Customer (KNY), more and more exchanges have started to delist privacy coins. A typical example is the platform, Bittrex, which delisted DASH, ZEC, and XMR, etc., and created a trend that has continued with other exchanges.
Is it worth worrying about this trend? Let’s break it down!
What Caused the Crackdown on the Privacy Coins?
- What are Wrapped Coins?
- About Wrapped Monero
- Postscript
What Caused the Crackdown on the Privacy Coins?
Several factors played a role in the recent suppressions:
- The privacy feature, which many investors find important, is no doubt a major reason for why they were delisted.
- Many governments have said that banning privacy coins is necessary to combat money laundering.
- According to exchanges, privacy coins have been delisted to reduce the risk of pressure (whether directly or perceived) from the government, regulators, and financial institutions, such as banks.
The synthetic Monero version — Wrapped Monero (WXMR) — was recently released to the public and will help future investors beat the current clampdown on privacy coins by many of these exchanges.
What Are Wrapped Coins?
Wrapped coins are ERC-20 tokens that were developed to improve the functionality and reliability of cryptocurrencies. These are assets that are hosted on the Ethereum blockchain and are the same price as a different but underlying asset. Wrapped coins are similar to stable coins as they both get their values from different assets. However, wrapped coins use a different asset and blockchain, while stable coins get their value from fiat currency.
Wrapped BTC (WBTC) has the same worth as Bitcoin at all times. Its smart-contract algorithm means that it is able to reproduce the price in real-time. This also allows it to use the demand-and-supply information obtained from the Bitcoin transaction, e.g. on an XMR to BTC exchange, to regulate its underlying fund.
About Wrapped Monero
The unique token requires an Ethereum blockchain and is backed by Monero so that users can use it on the ETH network. This innovation is expected to help change the Defi community. The BTC exchange is responsible for redeeming and minting this crypto coin and they will also be custodians for the Monero tokens. The symbol for this token is WXMR, and the intention behind creating it is to ensure that the De-Fi ecosystem has more liquidity.
Postscript
The introduction of WXMR brings a new dimension to the crypto world. It will ensure the efficiency of capital and liquidity will be shared more easily among applications. Investors are provided with the necessary transparency so that they can fulfill the requirements for KYC/AML regulations, which have now become a big deal in the cryptocurrency market.
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