Important Update on Potential Binance Delisting
Last week, I had a call with Binance about the four solutions we proposed as alternatives to creating a new “exchange-only” transparent address type. Unfortunately, Binance has decided to reject all of these alternatives. They cited practical difficulties in implementing policies like the Required Return Address and Viewing Key Submission and also have concerns about burning customer funds. The Payment Disclosures proposal was also rejected because it would require Binance to accept funds from a shielded address. Hanh’s Payment URI idea was originally met with interest; however, it was ultimately dismissed because it does not fully prevent transfers from shielded addresses.
The only available course of action is to implement the “exchange-only” address type. Failing to do so will result in ZEC being delisted from the Binance exchange. Binance is giving us until February 29, 2024 to comply.
Compliance Categories & Timing
Binance has categorized privacy coins into three groups based on their willingness to comply with implementing an “exchange only” address type.
- Immediate Risk of Delisting: Coins like Monero, which has already stated it will not comply, will likely be delisted next month.
- Under review: Projects like Zcash, that are actively seeking compliance solutions, but may face community or resource challenges, have been given until the end of February to comply.
- Compliant or Actively Working Towards Compliance: Coins such as Firo, which have adopted or are in the process of adopting the new address type, are not at risk of delisting.
The Binance representative stated that their stance on privacy coins is in response to increased regulatory pressure, including MiCA, recent initiatives from US regulators, and compliance to the settlement with the US Department of Justice.
Next Steps
The potential delisting of Zcash by Binance is a significant issue that requires serious consideration. A delisting carries the risk of limiting the accessibility of Zcash, potentially slowing user adoption and adversely impacting the price of ZEC. In addition, given Binance’s role as a major liquidity provider to numerous centralized and decentralized exchanges, the delisting could have broader downstream implications. There is also the possibility of a ripple effect where other exchanges consider similar actions in the future. It is crucial that we understand and prepare for the consequences of not adhering to their request.
Regardless of whether or not we decide to comply with Binance, we need a strategic plan for how to proceed. In the coming days, I will initiate discussions with ECC and ZF to thoroughly evaluate the consequences of a potential delisting and develop a path forward. Additionally, I am considering organizing a Twitter Spaces event in early January. This will offer the community a venue outside the forum to discuss this issue and share their perspectives.