The Japanese exchange Liquid recently revealed a massive asset retirement from its platform, which Chief Operating Officer Seth Melamed said was necessary for legal compliance.
„Liquid works closely with regulators in Japan and Singapore,“ Melamed told Cointelegraph July 25.
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Referring to the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations he added:
„As part of risk management we have to take a conservative approach to keeping tokens on the list that regulators consider potentially in conflict with the AML and CFT regulations and the Travel of Funds Rule.
Liquid offered a public statement
Assets removed from the exchange list include the privacy-focused currency Zcash (ZEC). A July 22 tweet from Zcash’s supervisory body, the Electric Coin Company, alerted the public to the removal of assets from Liquid’s list, prior to an official statement from the exchange.
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Liquid provided an official statement on the situation shortly thereafter, citing plans to achieve regulatory approval of Singapore as a crypto currency exchange operator. In light of its objectives, the exchange decided to withdraw 27 assets from its platform, including Zcash, with effect from 24 July. However, the statement noted the possibility that at some point the assets would be re-listed.
The exchange is approaching the end of its request for regulatory approval
„Liquid is in the final stages of submitting our application to the Monetary Authority of Singapore, or MAS, for an exchange license under the Payment Services Act,“ Melamed explained, noting the difficult alterations the entity chose, covering several categories, to seek such regulatory approval.
Melamed described the situation as a harsh grey area, adding that:
„Liquid is working with the industry to provide a framework for adhering to regulations not always compatible with the innovative nature of blockchain-based assets. It is never easy to be first, but we are committed to doing this.
Liquid is one of many exchanges taking alternative routes to regulation. The major Binance exchange banned U.S. customers in 2019, while many other exchanges have adopted similar restrictions.
*Helen Partz contributed by reporting on this story.