Update on Binance Monitoring Tag Issue

This topic is to discuss the blog post on Firo’s site.

The Firo core team would like to address some community concerns on the ongoing monitoring tag status that Binance placed on Firo back in January, along with a slew of other projects with privacy features, such as Monero, Zcash, Horizen, and Mobilecoin. Prior to this, in May 2023 Binance had also made Firo and other select privacy-preserving assets unavailable in certain countries in Europe. This was in response to increased pressure from regulators both from the EU (namely MiCA and AMLR) and also part of Binance’s settlement with the US Department of Justice.

This matter has been addressed several times before in our video updates and social channels, but we have noted that there is still a lot of misunderstanding surrounding this topic, so we would like to address the situation comprehensively.

The core team had been aware of the issue since September 2023, when Binance reached out to inform us of the new regulatory requirements being imposed on them. Even in early October, while we were aware of proposals from other projects to comply with these requirements, we were not confident that these would meet Binance’s regulatory requirements.

Because of the urgency of the matter, the core team proactively developed its own solution in the form of Exchange Addresses while communicating with Binance’s team. We also made sure to consult with the Firo community and got good support for the proposal. Binance’s team confirmed that our proposal was acceptable to their current requirements.

Our proposal was easy to implement both on the project and exchange side, didn’t require any complicated changes, and, most importantly, did not compromise users’ privacy more than the status quo. While other projects proposed alternative solutions, our Exchange Address approach was presented by Binance to these projects as the preferred solution for other privacy coins to adopt. To our knowledge, both Zcash and PIVX are adopting some form of Exchange Address type while Horizen has completely removed their privacy features. We are proud to have our solution adopted to protect our fellow privacy projects’ centralized exchange (CEX) listings.

We deployed the code for Exchange Addresses in November 2023, and it was successfully activated in January 2024 together with Lelantus Spark activation. This upgrade was supported by Binance. With the activation of Exchange Addresses, we were the first privacy coin on Binance to meet the new requirements. Coins that did not meet these new requirements such as Monero and Mobilecoin were delisted from Binance.

What’s Next?

We continue to work closely with Binance’s team, which is in the midst of transitioning its infrastructure to use Exchange Addresses. Their rough estimate is that it will take about three months to implement on their end. After Exchange Addresses are implemented, their team had mentioned that we can explore reopening Firo markets in Europe again.

The Binance Monitoring Tag is reviewed once every quarter, and a decision has not been made on whether it will be removed at the next review or only after Binance has completed its Exchange Address integration. Thus far, no new regulatory requirements have been communicated, and we view the fact that Binance is in the midst of integrating Exchange Addresses as a positive sign along with their assurances that all is well at the moment.

In the meantime, we continue to improve liquidity on FIRO through other avenues and further bolster decentralized exchange (DEX) liquidity and integrations, such as with FiroDEX/Komodo Wallet, BasicSwapDEX, and DCRDex. We have also been in talks with other cross-chain DEX options, such as Serai and Maya Protocol. Showing community support in these other DEX communities would give further impetus for those projects to integrate with us and reduce reliance on centralized exchanges.

Side Notes

There has been some discussion with Binance on whether to retain the FIRO/BTC pair or just focus on the FIRO/USDT pair, as interest in the FIRO/BTC pair currently pales to that of the FIRO/USDT pair. These discussions are unrelated to any of these regulatory concerns. We have initiated a Hummingbot campaign to improve liquidity on FIRO/BTC and are using it to gauge community interest in the FIRO/BTC pair.

We also note that some privacy assets were excluded from the Monitoring Tag. We were advised that this was because their privacy features were not materially used when transferring to Binance and, therefore, were not a material concern, while Firo users regularly used Lelantus functions to deposit into Binance.

We would like to thank Binance for remaining open to working with privacy projects like ours on finding a path to remain listed despite immense regulatory pressure on them when the easy thing to do would be to delist. While we strongly disagree with the regulations which in our opinion are overreaching and misguided, we understand that centralized exchanges are bound by the laws that govern them. We continue to monitor the situation and would also like to reiterate that we would not take any steps that would materially compromise user privacy for the sake of compliance.

1 Like

Discussions or comments about this blog post can be posted here.

it would be a good idea to have spark address used on those DEX like komodo, decred and basicswap

same with serai and maya

try to reach out cake wallet and p2p options like LocalMonero other app AgoraDesk

Agreed. Cakewallet is aware and as far as we know are integrating support though no timeline has been published.

Agreed on Spark support.
Additional work needs to be done to do atomic swaps on Spark since it requires a different logic and not sure what’s the appetite of the respective DEXes to support that so a lot of heavy lifting would need to be done. While we know that ‘Monero’ style atomic swaps are possible with Spark, the exact details need to be ironed out and implemented.

1 Like

What will you do?
If they tell you, that transactions “from Private addresses to Transparent addresses” on the Firo network are not acceptable.

Sell it !!! @ivan_ilv

Not a convincing answer, especially when there is a Decided by the EU Committee:
₿ Ban on anonymous crypto payments to hosted wallets, even for small amounts!
supporting information below
https://twitter.com/echo_pbreyer/status/1770853123633877233

If a crypto project’s goal isn’t to free everyone from financial tyranny, it’s not crypto, it’s just a financial project using blockchain technology that will ultimately be co-opted by the banksters.

1 Like

correct

This is actually incorrect. You can view many Twitter posts also debunking this.

https://twitter.com/paddi_hansen/status/1771929859704389954

Patrick actually gets it slightly wrong in that he says “MiCA already prohibits the listing of crypto-assets with built-in anonymisation function.” While that is correct, it allows it if the exchange can identify the user (through KYC) and transaction history (through the transparent address) of the user which is what Exchange Addresses are about.

https://twitter.com/L0laL33tz/status/1771712037065744822

“Its approved by EU Parliament and now moves to committee votes. It bans custodians from transacting w „non-identified“ wallets. It is not a ban on „anonymous wallets“. It is not a ban on „self-hosted wallets“. It does not make private transactions illegal.”

There’s a lot of nuance to these and while these regulations are worrisome, it also means that Exchange Addresses for now addresses these concerns while keeping it as a clear choice for users to interact with Exchange Addresses or not or to minimize its privacy leak by creating a new transparent address and then depositing from it.

Thank you for your reply.
In fact, at the moment on the Firo network it is possible to send funding confidentially to any transparent address, that may belong to both bribe takers and terrorists.

Purely subjective opinion - This is why the tag will not be removed.

By the way, there are coins on Binance that have had such tags for a year now.

Sure but those tags are there for different reasons and the monitoring tag is something that we have discussed in depth with Binance and they confirm it’s for regulatory reasons concerning privacy. So far it’s on track.

For the ‘bribe takers’ and ‘terrorists’ I don’t think there’s any evidence that there’s any meaningful use of FIRO for these activities and even for other coins like Monero, the vast majority of criminal activities still happens in transparent chains or Tether or even through the banking system.

Also did you see what Exchange Addresses do? It does not accept funds directly from Spark pool and only from transparent addresses. CEXes impose KYC requirements on their own and should promote their own risk program. It was developed in conjunction with close consultation with Binance’s compliance team.

Now again, I’m against all these financial surveillance and won’t do anything to compromise private transactions (such as Vitalik’s privacy pool idea).

1 Like

For your understanding, I am writing with good intentions.
Any arrows, that are there, the banking system or other crypto coins have the ability to launder or finance anything! does not matter! Because it cannot be considered as an excuse.
Because first of all, the capabilities of Firo are considered.
!!!
Do you want to be at the forefront of privacy, do you want the tag to be removed, do you want no questions asked?
Pay attention to what is written below, in terms of transactions on the Firo network:

  • from a transparent address to any transparent address - excellent, there are no questions about such transactions.
  • from a transparent address to any private address - excellent, there are no questions about such transactions.
  • from a private address to any private address - excellent, there are no questions about such transactions.

— from a private address to any transparent address - Not acceptable transaction, without disclosing the source or confirming a third party! Why?
The paradigm of revealing the hidden is broken. “Something is considered declassified, if the source is known or confirmed by a third party.
Think about it.
An example, of how to solve, You created an exchange address for exchanges. Similarly.
When creating a wallet, by default the first transparent address is created, Could this address be the only address to which transactions can be made from all private addresses that will be created in the such wallet? You can give this address a name “Address Un-private” - this address will be the source of declassification. Thus, you remove responsibility from Firo, but at the same time give Firo Users the right to hide, as well as the right and responsibility for revealing hidden.
For a person has the right to confidentiality, and the right to reveal confidentiality, and a person is responsible for revealing what is hidden. And there should not be any entity in the form of the “Firo network” et… that would violate such rights and responsibilities.

In short, Firo has created the opportunity to avoid responsibility, when revealing hiddens, a responsibility that rightfully entrusted to a person.