What happened
It's been another volatility-filled day in the world of cryptocurrencies. With most tokens seeing positive price action today, there are pockets of the crypto market that are outperforming their peers. One such space crypto investors have their eye on today is privacy coins.
As of 11 a.m. ET, Monero (XMR -1.64%), Zcash (ZEC -6.20%), and Secret (SCRT -8.00%) rocketed 15.9%, 11.7%, and 16.2%, respectively, over the past 24 hours.
Privacy coins have been outperformers over the past two trading days, as crypto investors price in the effects of impending crypto regulation. An executive order was officially signed by President Biden today to push various agencies to assess the risks and potential opportunities within the crypto space.
Image source: Getty Images.
So what
Privacy coins such as Monero, Zcash, and Secret each provide added layers of anonymity for users looking to transact over the blockchain. This is important to some users, given the rather transparent nature of the crypto sector overall right now. Many crypto enthusiasts are already aware that crypto transactions aren't fully anonymous. Users can pull up the wallet addresses of transacting parties (it's all public on the blockchain), with a number of high-profile individuals' wallets already doxxed on popular blockchain networks.
Should crypto regulation pick up, which would likely force crypto exchanges to report user information to the Treasury Department and allow for the government to peek into users' individual wallets, expectations are that privacy coins could see an uptick in usage. Many transact on the blockchain because they don't like the centralized nature of the traditional banking industry. Accordingly, privacy coins are coming into focus for many investors right now.
Now what
Interestingly, the proposed crypto regulation that investors expect right now is being seen in a bullish light. Comments from Treasury Secretary Janet Yellen that were inadvertently released on the Treasury's website highlighted the government's support for "reasonable innovation." Such comments are likely to encourage crypto investors, as this regulation does not appear to be a sledgehammer that's about to take out this sector.
However, there's little insight into what the specifics of the future regulation will be. Accordingly, this risk is likely to factor into higher volatility in the near term, as investors continue to reprice these risk assets.
