The Japanese cryptocurrency exchange, Coincheck announced that it will delist trading pairs for several privacy coins, including Monero (XMR), ZCash (ZEC) and Dash in June. The company was hacked in January, when $530 million in NEM tokens were stolen. Since then, Coincheck agreed to an acquisition by the brokerage firm, Monex this past April.

Privacy coins enable people to conduct cryptocurrency transactions with a greater level of anonymity than traditional cryptocurrencies. Government organizations have associated this anonymity with criminal activities. Herein lies the problem. People have a natural right to privacy, and government organizations want to punish crimes. One can compare this dichotomy to TSA screenings at the airport. Every single air traveler has essentially been punished with an unacceptable level of privacy invasion, in the hopes of catching terrorists. Yet in nearly 20 years, there have been zero terrorists caught in airport screenings since 9/11. Actual criminals – people who would seek to intentionally do harm to other people and their property – will always find ways around rules and regulations, while good people are forced to conform to new laws every day.

With privacy coins, there are several objectives. The total value of your holdings, what you send and what you receive are not observable, traceable or linked to you in any measurable way on the blockchain. Coincheck stated that it would delist their selection of privacy coins, based on a “drastic review” of its internal control system. In other words, they seem to suggest that privacy coins are higher risk than other digital assets, and it’s not worth it for them to continue listing them.

Coincheck’s stated goal is to thoroughly protect customers, but they must also protect themselves. Among the risks associated with privacy coins, Coincheck has affirmed that they present risks and challenges associated with maintaining compliance with anti-money laundering (AML) regulations.

In Japan, the country’s Financial Services Agency (FSA) is the regulatory body that issues licenses to cryptocurrency exchanges in the country. Similar to the SEC and other organizations in the US, they have a great deal of power and influence that extends past legislation. In this context, it’s been rumored that the Japanese FSA is putting pressure on crypto exchanges to delist privacy coins. If others begin to follow suit, then it may be an indicator that new regulations are on the horizon.

At the time that Coincheck was hacked, they were unable to make the appropriate upgrades to maintain compliance with the FSA. As such, the new management team brought on board by Monex may have included this move against privacy coins as part of their overall strategy to regain the graces of the FSA.

In addition to delisting Monero, ZCash and Dash, Coincheck plans to also delist Reputation Token (REP). Although it is not in the same league as the other coins in terms of privacy capabilities, REP does have a perceived association with unlicensed gambling.

Users on Coincheck will have until June 18 to withdraw their XRM, Dash, ZEC and REP. After the deadline, any remaining coins from these groups will be converted into fiat and credited back to the customers.