Monero: Privacy and Prospects for XMR
Key Takeaways
The delisting of Monero (XMR) from major centralized exchanges (CEXs), including Binance and OKX, has triggered a fundamental shift in liquidity toward decentralized (DEX) and P2P platforms. This has created operational risks for holders, including falling trading volumes, widening spreads, and increased exchange complexity. Despite this, on-chain metrics demonstrate resilient network activity, confirming sustained underlying demand for privacy. The asset's future depends critically on the pace of decentralized infrastructure development (primarily atomic swaps) and the ecosystem's ability to adapt to tightening AML policies in key jurisdictions.
Introduction
This study analyzes the consequences of increased regulatory pressure on the Monero (XMR) ecosystem from Q4 2023 to Q2 2024. The problem lies in the fact that mass delistings from centralized exchanges threaten to isolate the asset, reduce its liquidity, and increase risks for investors and users. This article aims to quantitatively and qualitatively assess this impact, identify key risks, and develop practical recommendations for mitigation. The analysis considers changes in trading volumes, on-chain indicators, and the legal context in leading global jurisdictions.
1. Regulatory Landscape and Its Tightening
A key driver of pressure on privacy coins has been the tightening of global Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) standards.
- European Union: The adoption of the AMLR¹ legislative package in May 2024 imposes strict obligations on Crypto-Asset Service Providers (CASPs) regarding customer verification and transaction tracking, making support for privacy coins like Monero nearly impossible for regulated platforms.
- USA: FinCEN and other regulators consistently classify privacy coins as high-risk instruments. While there is no direct ban, regulatory pressure forces exchanges operating in the US market to preemptively delist such assets to avoid legal consequences.
- Asia (Japan, South Korea): These jurisdictions were among the first to take a hard line. The Japanese FSA pushed local exchanges to delist XMR as early as 2018, creating a precedent followed by other countries. The result was the termination of Monero support by major exchanges: OKX — January 5, 2024², Binance — February 20, 2024³.
2. Impact on Liquidity: Quantitative Analysis
Delistings led to a sharp drop in liquidity on centralized platforms and its partial migration to decentralized and P2P ecosystems.
Chart 1. Average Daily Trading Volume of XMR on Binance and OKX
(30 days before and 30 days after delisting)
[Graph/chart showing the drop in volumes. For example:
X-axis: Period (January 2024, February 2024)
Y-axis: Trading volume, USD millions
Column 1 (Binance before delisting): ~$45M
Column 2 (OKX before delisting): ~$5M
After delisting, volumes on these platforms are zero.]
Source: Aggregated data from CoinGecko, Kaiko. Periods: 01/21–02/19/2024 for Binance; 12/06/2023–01/04/2024 for OKX.
Accurate estimation of volumes on DEX and P2P platforms is difficult due to their private and distributed nature. However, indirect data and the growth of offers on platforms like Bisq and LocalMonero indicate a shift in activity rather than its complete disappearance.
Table 1. Comparison of Liquidity Characteristics: CEX vs. DEX/P2P
| Parameter | Centralized Exchanges (CEX) | Decentralized/P2P Platforms |
|---|---|---|
| Trading Volume | High (pre-delisting) | Low/Fragmented |
| Spread | Narrow | Wide, unpredictable |
| Execution Speed | Instant | Slow (requires finding a counterparty) |
| Counterparty Risk | Exchange risk (hacks, sanctions) | Counterparty risk (fraud) |
| Privacy | Low (KYC required) | High |
3. Technological Resilience and On-Chain Activity
Despite market turbulence, Monero’s fundamental network metrics demonstrate stability, indicating sustained core demand.
-
On-chain metrics (30-day average as of 05/28/2024):
- Average daily transactions: ~28,000 (Source: BitInfoCharts).
- Average transaction fee: ~$0.004 (as of 05/28/2024, in USD; Source: Monero blockchain explorers).
- Network Hashrate: Stable in the 2.3–2.8 GH/s range, with no significant drops following delistings, indicating continued economic interest from miners (Source: 2miners).
Chart 2. Monero Network Hashrate Dynamics (GH/s), 2024
[Line graph showing stable hashrate during Q1–Q2 2024 without sharp crashes after delisting dates.] -
Development Status:
- The protocol continues to be actively developed.
- The Kovri project (I2P implementation) is frozen (archived); the last significant commits to the repository date back to 2019–2020, and it is not an active development focus⁴.
4. Risk Matrix for Monero Holders
Probability assessments are based on the frequency of regulatory precedents, market trends, and public data on network status.
| Risk | Probability | Impact | Mitigation Measures |
|---|---|---|---|
| Liquidity Reduction | High | High | Use of atomic swaps (BasicSwapDEX) and P2P platforms (Bisq). Diversification of exchange paths. Planning for large trades. |
| Regulatory Pressure | High | Medium | Storing assets in non-custodial wallets (Monero GUI, Cake Wallet). Minimizing contact with regulated CEXs. |
| Mining Centralization | Medium | High | Monitoring hashrate distribution (~45% held by 2 pools as of May 2024⁵). Supporting smaller mining pools. |
| Legal Risks | Medium | Medium | Using AML tools (where available) before sending funds to a CEX. Segregating assets by use case. |
| Tech Vulnerabilities | Low | Critical | Timely updating of wallet software. Monitoring security reports from Monero Research Lab. |
5. Development Scenarios
Base Scenario (High Probability): Adaptation and Niche Use.
Regulatory pressure on CEXs will persist. The Monero ecosystem will adapt through the growth of P2P markets and the gradual implementation of user-friendly atomic swaps. The asset will occupy a stable niche as a tool for private transactions.
Pessimistic Scenario (Medium Probability): Coordinated Suppression.
US, EU, and Asian regulators implement coordinated bans targeting not only exchanges but also P2P platforms and developers. Liquidity drops sharply, and usage becomes high-risk.
Optimistic Scenario (Low Probability): Technological Breakthrough and Demand Growth.
The global trend toward privacy intensifies. The successful implementation of easy-to-use and secure atomic swaps (e.g., via the Farcaster protocol) integrates Monero into the DeFi ecosystem, exponentially increasing liquidity and demand.
6. Practical Risk Management Recommendations
- Store assets in non-custodial wallets. Use official wallets (Monero GUI, Monero CLI) or verified mobile apps (Cake Wallet, Monerujo) where you have full control over your private keys.
- Master decentralized exchange methods.
- P2P Platforms (Bisq, Haveno): Always use the platform's escrow service, check counterparty reputation, and start with small amounts for verification.
- Atomic Swaps: Research and test small-amount solutions like BasicSwapDEX or wallets with BTC-XMR swap support. Note that these require higher technical literacy.
- Use AML screening before interacting with CEXs. If a transfer to a centralized exchange (that still supports XMR) is unavoidable, use analytical services to assess the risk score of your funds. This reduces the likelihood of a freeze.
- Segregate assets. Keep funds for long-term holding separate from those used for frequent transactions or exchanges. This minimizes the risk of "tainting" your primary capital.
Conclusion
Monero is at a bifurcation point. Technologically, the project remains a leader in privacy, and its network demonstrates resilience. However, regulatory pressure has successfully pushed the asset out of liquid centralized markets, presenting the main challenge for its ecosystem. XMR’s future trajectory depends on the balance between global demand for privacy and the community's ability to create a convenient, secure, and liquid decentralized infrastructure.
Key actions for market participants:
- For long-term investors: Diversify risks, view XMR as a strategic privacy asset rather than a speculative tool, and be prepared for non-custodial storage.
- For traders: Account for low liquidity and high spreads on DEX/P2P platforms. Master atomic swap tools for effective arbitrage and exchange.
- For developers: Focus on improving the UX/UI of decentralized exchange services and atomic swaps to lower the entry barrier for average users.
Sources
¹ Council of the EU. (2024, May 24). Anti-money laundering: Council gives final green light to new rules.
https://www.consilium.europa.eu/en/press/press-releases/2024/05/24/anti-money-laundering-council-gives-final-green-light-to-new-rules/ (Accessed: 05/28/2024).
² OKX. (2023, December 29). OKX to Delist XMR, ZEC, ZEN and DASH.
https://www.okx.com/support/hc/en-us/articles/23755431326221-OKX-to-Delist-XMR-ZEC-ZEN-and-DASH (Accessed: 05/28/2024).
³ Binance. (2024, February 6). Notice of Removal of Trading Pairs — 2024-02-20.
https://www.binance.com/en/support/announcement/notice-of-removal-of-trading-pairs-2024-02-20-2024-02-06 (Accessed: 05/28/2024).
⁴ GitHub — monero-project/kovri.
https://github.com/monero-project/kovri (Accessed: 05/28/2024).
⁵ MiningPoolStats. (2024). Monero (XMR) mining pools.
https://miningpoolstats.stream/monero (Accessed: 05/28/2024).
⁶ CoinMarketCap. (2024). Monero (XMR) price, charts, and data.
https://coinmarketcap.com/currencies/monero/ (Accessed: 05/28/2024).