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Bad times for cryptocurrencies that offer an anonymity option to their users. After Chainalysis, the company Elliptic - also specialized in monitoring transactions - will closely scrutinize transfers on the blockchains of Zcash and Horizen.
Elliptic has ZEC and ZEN in the eye
In a press release issued this June 30, the company Elliptic announces that Zcash (ZEC) and Horizen (ZEN) will be monitored by its platform.
These two so-called “anonymous” cryptos include the possibility of making its transactions confidential. However, by default, they are just as transparent (pseudonyms) as on Bitcoin.
Elliptic's monitoring will focus on these “visible” transactions. Genesis, a giant in crypto lending to institutional investors, has announced that it will use Elliptic's tools now. The objective: to detect any illegal activity with regard to the Zcash and ZEN transactions.
“At Genesis, we provide liquidity to our customers on a wide range of digital assets. As a highly regulated entity, we must apply the same strict compliance standards for all assets on our platform. "Michael Moro, CEO of Genesis
Source: elliptic.co
Elliptic now offers the widest coverage among blockchain transaction monitoring solutions. Its platform effectively supports 97% of the most important crypto-active assets in terms of trading volume.
Partial monitoring, but essential for institutional investors
As I said above, only non-anonymized transactions can be tracked. Where Monero (XMR) makes all transactions anonymous, Zcash and Horizen offer “Z transactions”.
Also called shielded transactions, these are based on the zk-SNARK protocol. It allows transactions and ZECs / ZENs to “disappear” in a shapeless mass. This aggregate is called shielded pool and includes all the anonymous ZEC / ZEN.
Elliptic can therefore only monitor what happens once these transactions re-enter the “visible” transaction domain. This is generally the case for sending coins to an exchange platform (which do not accept Z transactions).
Source: elliptic.co
But if this surveillance is only partial, why is it so vital for institutional investors? Well, because ultimately, these “anonymous” cryptocurrencies become like cash, which would be deposited in the bank.
By becoming visible again, when being deposited on a crypto-exchange, it is possible to estimate whether the movement is suspect or not. If some transparent transactions have taken place before, these are all clues to identify “non-compliant” funds.
"By providing monitoring support for confidential cryptos such as Zcash and ZEN, regulated financial institutions can now engage with this important class of crypto assets, securely and compliant." "Tom Robinson, chief scientist of Elliptic
This surveillance of cryptos with anonymity would it ultimately be rather a good thing? It is not all white or black. It is true that the overall confidentiality of transactions will decrease. But this surveillance will at least have the merit of attracting new investors ... And why not at least attract hostility from the authorities.
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