Having had a rebrand, the Electric Coin Company, the firm behind privacy-centric cryptocurrency Zcash, did not have the start to the year that they would have wanted.
It was a quarter of losses in Q1 as the firm operated at an average monthly deficit of $186,000 during that first quarter of 2019. To their credit though, the firm put out their costs intending to provide transparency; good from a company so preoccupied with privacy.
The figure of losses was calculated by considering that approximately $635,000 was their monthly running costs, including employee compensation paid in ZEC, and that they were bringing in $449,000 per month.
On the plus side, though, the company’s overall holdings ended up increasing as they stated in their report:
“The company’s first-quarter ending amount of USD and Zcash was approximately $5.2 million. The company currently holds approximately $6.4 million worth of USD and Zcash.”
It is difficult to decipher the heading and progress of the company as it is increasing its holding, but running at a loss, which is indicative of early-stage growth. Still, there is a lot of opposition in today’s market to privacy coins, especially from regulators who don’t appreciate the added anonymity.
That being said, it is not all cloak and dagger stuff from the users of privacy coins. Jack Gavigan, in charge of product and regulatory affairs at the Electric Coin Company, explained that the advantages of cash are supposed to be seen in the benefits of Zcash from the point of privacy.
“It is very situational. If you look at the way in which Zcash is used, it affects whether regulators will be happy or not. Take an exchange; in the US, all are regulated as money services which means they have to comply with anti-money laundering and KYC regulations, and they have to report suspicious activities too,” he told Forbes.
“So, if someone is dealing in crypto through an exchange, then they have to provide KYC information, they check to make sure the source of funds is reasonable and not suspicious. As a result, the regulator effectively has visibility of those on and off ramps between fiat and crypto.”
“We keep using the analogy of cash, if I withdraw cash from the bank, the bank knows I have done that, if I deposit, they know as well – but nobody knows what I do with the cash in the meantime.”
Indeed, what Gavigan is getting at is the level of regulation in play still provides the security needed for regulators but offers the privacy that is often craved even in a non-nefarious sense.
Yet, privacy coins continue to struggle with their adoption and market growth with investors still preferring the much more regulatory-tolerant cryptocurrencies available on the market.