What’s Happening With Privacy Coins?
Privacy-focused blockchains have largely been ignored this year due to “DeFi” and “Ethereum Killers” possessing the spotlight.
Without taking the center stage, blockchains that are capable of private transactions have always been a major narrative and one of the strongest innovators in the cryptocurrency space.
Today we will take a look at the recent developments surrounding Monero and Zcash, the two most-used privacy-focused cryptos.
In the last year, Monero is up by 95%, and Zcash follows closely behind at 76%. This indicates that both cryptos had relatively calm price actions this year compared to their large alt-coin peers; other cryptos like Cardano and VeChain are both up over 200% with very little development progress to show for it.
Though these privacy coins provide a higher fundamental value proposition than other top-100 cryptocurrencies, why do they underperform? Is that performance going to change anytime soon?
This Month, Monero & Zcash Outperform Their Peers
In the month of October, we noticed that both Monero and Zcash have outperformed their large-cap alt-coin peers by a large margin.
Monero is up 40% and Zcash is up 20% this month; meanwhile, all other alt-coins are slowly recovering from the September sell-off and are just breaking even from their September 1st prices.
Why Are They Outperforming This Month?
The most recent developments surrounding Monero and Zcash have pertained to anti-money laundering regulations. Instead of the usual negative news that accompanies AML regulation, the news this month has taken a positive direction.
Monero was recently highlighted in a Perkins Coie research report that concludes privacy-focused coins are compatible with existing anti-money laundering regulations.
The research focused on each privacy-focused coin and delves into how exchanges can approach existing AML rules to ensure they stay compliant during private transactions.
The report even goes as far as to ensure that privacy coins are compatible with the infamous New York BitLicense, which is considered the strictest regulatory license a cryptocurrency business can obtain.
This report was then followed by an unrelated (or perhaps related?) announcement 15 days later by Gemini Exchange, announcing they will fully support private “shielded” Zcash transactions.
The announcement was followed by a reminder from the Zcash team, stating that Gemini is a BitLicense holder and communicates regularly with the New York Department of Financial Services (NYDFS) to ensure that all listed coins and their features meet all regulatory requirements.
This fresh development makes Gemini the first fully-regulated exchange to support “private” crypto deposit and withdrawal transactions. The news is an indicator that regulators and exchanges are working together to understand blockchain privacy technology. Together, they can ensure that there won’t be a curveball situation, in which privacy coins are suddenly delisted from exchanges.
Conclusion
We believe that one of the largest reasons privacy-focused cryptocurrencies have underperformed this year is due to their unclear regulatory status. Now that these developments are in place, privacy coins feel like a more permanent fixture in the crypto world.
This exciting news may increase the public’s overall exposure to their benefits and clearly differentiate these coins from the other cryptocurrencies in the market.
