Hot take: re delistings, "be your own bank" works both ways. Life hack: it's possible to be on "nobody's side" and have an objective opinion. Paradigm shift when presented new data is a sign of intelligence.

A thread.

(This is not specific to any exchange's delistings.)

1) ZEC, DASH, XMR delistings: These can't be put in the same basket. There's a distinct difference between privacy-by-default and opt-in privacy.

(To that point, FAQ: will MW for LTC result in LTC delistings? It shouldn't. It's opt-in.)

2) My team has investigated hundreds of cryptocurrency crime cases -- and these are not just thefts, but span the array of typologies from narcotics to HT. I have not seen a case where ZEC or DASH was used as a core laundering vehicle.

3) For these three assets, almost all investigative cases we've had involve thefts of multiple assets (seed phrase compromise) -- and not laundering of proceeds from unrelated illicit activity (narcotics etc.)

4) I have seen cases where XMR is used for illicit activity (besides thefts), but relative to BTC, this is rare. Far more rare than some elected officials would have you believe. The concern for XMR is able to be mitigated via RBA in a compliance program.

5) There is practically no precedent/cause, insofar as use for illicit activity is concerned, for ZEC/DASH delisting. Most compliance tools barely touch these assets not due to their privacy features, but due to the relatively smaller use. Consequently, less attribution.

6) Less attribution = less alerts triggered in compliance tools = less identification of suspicious activity = less SARs. Pretty simple.

Consequently, it's plain that delisting of ZEC/DASH, for that matter any opt-in or less-adopted digital asset, is proactive -- wrongly.

7) XMR is privacy-by-default, which is awesome. From a compliance POV, this shifts how RBA is conducted. There will not be compliance tools to tell exchanges SOF.

(Any claims about "cracking XMR" have been, in the most generous terms, woefully exaggerated.)

8) Without the ability to conduct SOF via a tool (or, another example people may be familiar with -- if SOF is not possible due to use of CoinJoin, people get asked questions by exchanges sometimes) -- the burden for SOF falls onto the exchange -and the customer-.

9) This means that customers must be willing to accept one of the following:

A) Convenience associated with transacting on public blockchains or providing view keys/equiv (not desirable)
B) On an as-needed basis, substantiate their own SOF

10) Realistically, I envision the reality presented in the preceding Tweet as an example of how different digital assets have their unique and needed places in this ecosystem. Examples in next Tweet:

11)

A) Use of ETH for speculative investment (customers won't want to provide SOF each time, and opt for convenience)
B) Use of XMR for their Pornhub (or more accurately, "niche interest" subscription) that they'd prefer not to discuss

12) Contrary to popular belief, XMR does and always has had the tools needed to equip users to demonstrate SOF. The real question is "are crypto traders ready to go through the effort to demonstrate SOF?"

Probably not. I attribute this as part of the rise of DeFi.

13) Point being: "be your own bank" cuts both ways. You're empowered to own your own money, but you're also obliged to:

A) Be responsible -- no more chargebacks. Can't blame anyone but yourself if scammed, hacked, etc.
B) Fulfill compliance requirements

14) For all this industry roasts normies that don't want to be their own banks -- bear in mind that it's evidenced this industry (particularly... especially traders) have been coddled, ironically, by centralization in compliance. Without that burden on exchanges, it's on you.

15) My opinion is that a responsible and law-abiding cryptocurrency participant can, has, does, and will maintain all records they need to demonstrate SOF when needed, and chooses digital assets with the appropriate balance needed to be their own bank.

16) My opinion is that delisting of opt-in privacy coins is pretty excessive. As long as customers are able to demonstrate SOF for use of privacy features (or by-default privacy), there isn't an issue. It does, however, become an issue for exchange resources (staff costs)

17) Realistically -- this means DeFi will rise even more. Which is great, BUT -- BIG but here, that means the burden for SOF is going to fall -EVEN MORE SO- on the users.

AKA, be ready to substantiate a helluvalot more to the IRS.

The burden will shift from exchanges to you.

18) None of the above was to state opinion on existing regulation, be a bootlicker or anarchist (or anything in between), nor was directed at any given exchange.

This was purely to opine on current and future realities.

(Inevitably, there will be LARPers in the comments anyway)

19) Remember that most people on Crypto-Twitter have a financial interest in their narrative. There is a reason there are camps and echo-chambers. Break the cycle. Be on nobody's side. It's fun.

Signed, the blockchain analyst privacy advocate