Kraken Pulls The Plug on Monero (XMR) in Europe Amidst Regulatory Crackdown

In a blog post, the U.S.-based cryptocurrency exchange announced that all trading and deposits for XMR markets, particularly XMR/USD and XMR/EUR, will end on October 31 at 15:00 UTC for users registered in the European Economic Area (EEA). Open orders will be automatically closed at that time.

Kraken has set a deadline of December 31 for XMR withdrawals, and any XMR balances remaining after that date will be switched to Bitcoin (BTC) based on current market rates, with distributions completed by January 6, 2025.

The move aligns with growing regulatory scrutiny of privacy coins such as Monero, which provide better transaction anonymity. Kraken highlighted that this choice was not taken lightly. 

“Kraken remains mission-driven and committed to supporting the most comprehensive set of digital assets possible, in alignment with our regulatory and compliance obligations,” the exchange mentioned in its statement. 

Europe’s digital asset framework, the Markets in Crypto-Assets Act (MiCA) took effect in June 2023. Its implementation was divided into two phases. The first phase was executed in June 2024, with the second phase scheduled for December 2024. Phase 2 is a prerequisite for the implementation of the comprehensive MiCA system. The upcoming phase will also include guidelines for Crypto Asset Service Providers (CASPs).

In January, the European Securities and Markets Authority (ESMA) issued a draft document on the qualifying crypto assets as financial instruments under Article 16. The final guidelines for this will be announced in December. Some exchanges had already changed their service offerings before the MiCA framework’s rollout. For example, Bitstamp pulled the EUR-based stablecoin EURT in June. 

Previously, on June 10, Kraken discontinued XMR functionality for users in Belgium and Ireland. The decision was made following the European Union’s implemented anti-money laundering (AML) measures. The crypto community considered the EU action as an attempt to outlaw self-custodial wallets and cryptocurrency transactions.

The new AML standards forbid consumers from using tokens like XMR to make merchant payments and for crypto-asset service providers to offer privacy coins, as previously outlined by Patrick Hansen, director of policy and strategy for Circle in the EU.

Several other nations have similarly implemented restrictions on privacy-focused tokens. In 2018, Japan restricted anonymity-enhancing tokens. In 2020, South Korea prohibited privacy coins from trading platforms and Australian exchanges started delisting privacy tokens due to new rules. Dubai ceased all operations linked to privacy coins including the issuance of anonymity-enhancing tokens on February 7, 2023.

Source: Brave New Coin Market Cap Table

XMR’s price broke ascending trendline support on September 24 and dropped around 14.5% within a week following Kraken’s Monero delisting in Europe announcement. Source: Brave New Coin

Monero (XMR) trades down on Wednesday after losing over 6% on the previous day. XMR fell more than 10% on Tuesday following Kraken’s news that it is delisting privacy coin in Europe, fueling the bearish momentum.

Additionally, Monero’s negative prognosis is supported further by Coinglass’s long-to-short ratio, which stands at 0.9. This ratio below one implies pessimistic market sentiment, as more traders expect the asset’s price to fall. As of Thursday, XMR is trading around $139.18, remaining below the 61.8% Fibonacci retracement level of $152.83.

Despite Monero’s delisting in the EU, adverse price movement, and dismal on-chain statistics, the bearish outlook would be overturned if Monero’s daily candle exceeds $152.83 and holds above its 200-day EMA at $156.45. This situation could cause Monero’s price to climb and retest the next daily resistance around $180.79.