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Monero comes to Ethereum to give transparency to private cryptocurrency

The exchange BTSE launched a token in Ethereum (ETH) that seeks to create a framework of transparency in operations that involve monero (XMR) in exchange houses. The idea is to create a market with a cryptocurrency that has parity with XMR, with the aim of allowing regulators to keep track of these operations and that traders can trade with a token that has the value of monero in the DeFi markets.

The information was released on January 6 through the BTSE blog, where it is explained that the “wrapped” token is called WXMR and will be protected by the exchange.

It was also reported that the process for the issuance and distribution of the WXMR token will be done through a “test of reserves.” This test allows the exchange to create each token in correspondence with the funds in custody, since each token issued is equivalent to one monero deposited in the exchange.

According to the post, it is as simple as depositing XMR on the exchange and using the conversion function to exchange it for the “wrapped” token or vice versa. According to BTSE, “periodic cryptographic backup tests will be released.”

BTSE allows entry and exit operations of the WXMR contract. Source: BTSE / btse.com

The launch of BTSE addresses the dilemma that arises between the interests of exchanges and those of regulators and state agencies, who seek to know the origin of the funds mobilized in networks focused on privacy. Monero, precisely, allows you to hide the sender, recipient and the funds involved in a transaction.

In recent days, Bittrex announced that its clients had funds in XMR, ZEC and DASH they had to withdraw them before January 15, 2021This fact was not well received in the ecosystem and even generated confusion. The decision appears to comply with the requirements of regulators, who supposedly seek greater transparency in operations through measures such as the implementation of identity controls (KYC) and anti-money laundering (AML).

BTSE points out, then, that regulators could find a greater ease of supervision in transactions that are registered in a public blockchain such as Ethereum or Bitcoin, as will happen with the wrapped token WXMR.

On the subject, and ironically, Riccardo Spagni, former lead developer of Monero, challenged Bittrex in a tweet that alluded to the BTSE announcement: “Hey @BittrexExchange @BittrexGlobal @BittrexUS, are you going to include WXMR? It is traceable, so they should have no problem including it. “

With the rise of discussions about the control of privacy on the Internet, the idea spread that cryptocurrencies such as monero, zcash (ZEC) and even DASH allowed criminals to carry out illegal operations on the dark web, especially money laundering. . However, recent reports from CryptoNews contrast with this view, pointing out that existing regulations could be enough to limit criminal behavior, even with privacy-focused coins.

Monero on Ethereum DeFi markets

One of the arguments for the creation of the WXMR token is precisely to increase its liquidity through the DeFi markets of Ethereum. Nowadays XMR exceeds 2.9 billion market capitalization, according to CoinMarketCap.

Monero’s market capitalization is around $ 2.9 billion. Source: CoinMarketCap.

In fact, since the middle of last year, some Reddit users had raised the possibility of XMR reaching the DeFi markets as it had already happened with bitcoin (BTC): “This would be great, since it is difficult for many people to access a way to get XMR because many exchanges do not include them due to their privacy nature, “commented MasterTheGame on Reddit.

This expectation grew in November 2020, when the WBTC tokens locked in Ethereum amounted to $ 3 billion. As of this writing, the new WXMR token’s trading volume against ETH is $ 52,877, according to data from Uniswap.