The announcement was made yesterday: crypto exchange Bittrex Global has once again added Zcash (ZEC) to the cryptocurrencies that can be traded on its platform.
— Bittrex Global (@BittrexGlobal) August 31, 2021
The cryptocurrency had been removed from the exchange on 15 January, when concerns about regulatory compliance of the use of high-privacy cryptocurrencies were called into question. In fact, along with Zcash, the exchange also delisted Monero (XMR) and Dash. It is worth noting, however, that XMR and Dash have not yet been reintroduced.
2021 not great for privacy cryptocurrencies
During this year, neither Monero nor Zcash managed to return to historical highs, although XMR came closer than ZEC.
Dash has yet to even come close to the December 2017 price record.
Decred (DCR), which hit its all-time high in April this year, has been doing better, as has Horizen (ZEN), which hit it in May. Indeed, Decred has now even surpassed Zcash in market capitalization, while the main ones in this respect remain Monero and Dash.
Crypto regulation versus too much privacy
The problem lies in the regulation of transactions.
Cryptocurrencies with a high level of privacy allow for almost absolute anonymity, though Dash cannot be considered a real “privacy coin” from this point of view.
This is achieved by encrypting the information contained in transactions recorded on the public blockchain.
To be fair, even Bitcoin can allow a high level of privacy, if for example one uses Lightning Network which does not record transactions on the public blockchain, but since all LN wallets must record on the public blockchain at least the transaction opening the channel, privacy on Bitcoin remains much more limited than on real privacy coins.
In particular, it is Monero that is most commonly used to conceal transactions, despite these all being recorded on its public blockchain.
Initially, it was thought that Zcash might oust Monero from this leadership, but XMR is holding on to it.
Over the course of 2021, however, the focus has shifted a bit away from privacy coins, which were the subject of much attention at the beginning of the year that led several exchanges to delist them, and has become more focused on cryptocurrencies as a whole.
In fact, by now, the regulatory discussion does not seem to treat privacy coins any differently to other cryptocurrencies, perhaps thanks in part to the Lightning Network, which effectively brings Bitcoin into this small group of cryptocurrencies that can guarantee high levels of privacy.
LN is now becoming more and more popular, and since privacy coins are not yet widely used – or at least not as much as BTC – it is likely that eventually regulators will focus their attention mostly on non-public BTC transactions on LN, taking with them the public but encrypted transactions of real privacy coins.
Beyond Bittrex: other exchanges will return to listing ZCash, Dash and Monero
In such a scenario, it is to be expected that other exchanges may also re-list privacy coins, and that Bittrex itself may eventually re-list XMR and Dash as well.