After the FTX episode, the cryptocurrency space has been characterized by a gloomy picture. Bitcoin and most altcoins have come under severe selling pressure over the past couple of weeks.
However, in this time of uncertainty, an altcoin focused on anonymity is outperforming the rest of the cryptocurrency market following rumors that Europe is planning to ban privacy coins.
Built on the Cosmos Network (ATOM), Secret (SCRT) is a privacy-focused chain with end-to-end encryption and smart contracts called “Secret Contracts”. The network allows users to make any coin or blockchain private by encrypting details such as sending/receiving wallet addresses, token balances, etc. at the time of exchanging Secret tokens.
To turn coins from a few different blockchains into “Secret Tokens,” the project uses something called Secret Bridges. To convert coins from other blockchain networks, Secret first parks the coins in a smart contract of the original chain. Secondly, they mint the equivalent amount of tokens on the Secret network.
SCRT, the native token of the Secret Network, has recently been in the news for a strong rally. At the beginning of the week on Wednesday, the price of the SCRT token had a parabolic trend, gaining more than 100% in just 24 hours, going from $0,64 to $1,29.
However, SCRT has failed to sustain the price gains and has retraced significantly from there. At press time, SCRT is trading at $0,84, a more than 30% retracement from its weekly highs.
Increasing scrutiny of coins for privacy in Europe
Privacy coins are facing a increasing pressure by regulatory agencies around the world, especially in the United States and Europe.
The Financial Action Task Force (FATF), the global regulatory body, is trying to enforce the “travel rule,” which recommends the government oblige stakeholders, such as banks, cryptocurrency exchanges, hosted wallets and over-the-counter (OTC) desks, to share certain identifying information relating to individuals involved in cryptocurrency transactions worth $10.000 or more.
Regulatory agencies have been on the hunt for cryptocurrency blending services that can hide details of the original source of transactions. Earlier this year, the US Treasury sanctioned Ethereum-based cryptocurrency blending service Tornado Cash. A few weeks later, the developer of this open-source protocol was arrested in the Netherlands, prompting massive criticism from cryptocurrency privacy advocates.
However, cryptocurrency privacy players are giving the floor back to regulators. Coin Center, the cryptocurrency think tank, recently sued the Office of Foreign Assets Control (OFAC) over the sanctions. Jerry Brito, executive director of the Coin Center, said:
Not only are we fighting for privacy rights, but if this precedent is left standing, OFAC could add entire protocols like Bitcoin or Ethereum to the sanctions list in the future, banning them immediately without any public process. This cannot go unnoticed.
