Thursday, 2 February 2023

Crypto News

Privacy coins are surging — Will regulatory pressure stall their stellar run?

Privacy coins are surging — Will regulatory pressure stall their stellar run?

Recent weeks saw a massive surge of the so-called privacy coins’ prices — namely Monero (XMR), Dash (DASH), Zcash (ZEC) and Haven Protocol (XHV). As many other cryptocurrencies and the industry at large faced immense regulatory pressure amid the war in Ukraine, one narrative that began taking hold in the crypto space was the potential of such privacy-enhancing assets to provide investors a greater level of financial anonymity. But, can privacy coins deliver on Bitcoin’s (BTC) original promise? 

A good month for privacy-focused assets

Over the past month, Monero has almost doubled its tally. With some minor oscillations, it rose from $134 on Feb. 24 to over $200 on March 26. ZEC showed even more impressive dynamics that hiked from $88 to $202 over the same period. DASH also pulled off a rally, if a bit more modest, from $83 to $128. One of the biggest winners appeared to be XHV, which has almost tripled its price from $1.60 to $4.20.

Two main macro-level factors could underpin this sudden rise of privacy coins. The first one is the regulatory pressure building up around more “mainstream” cryptocurrencies due to the war in Ukraine and the resulting suspicion — as unsound as it is — that Russian elites can use crypto to circumvent the financial sanctions imposed on them. Another one is the executive order by United States President Joe Biden, which, in fact, doesn’t bring any outright harm to the industry with its roadmap or reports that should eventually lead to a clear regulatory framework for digital assets in the U.S.

Speaking to Cointelegraph, Justin Ehrenhofer from the Monero community suggested that the recent price surge has come from more family funds and individuals holding Monero as a hedge and was spurred by recent market and political turmoil. A member of the Haven Protocol community, Ahawk, tied XHV’s price spike to an upcoming integration on THORChain, which he called one of the most cutting-edge decentralized exchanges (DEXs) in all of crypto. Jack Gavigan, executive director of the Zcash Foundation, said that the surge of privacy coins’ prices could be the result of Bitcoin price’s strong dynamics.

Privacy without compromises

At the outset of the cryptocurrency movement, anonymity was one of the core promises of Bitcoin and crypto at large. But, alongside industry maturing and gradually merging with the traditional financial markets, digital currencies have faced a demand from both institutional investors and…

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