In brief
- Monero was one of the few cryptocurrencies to rise following Biden's new tax plans.
- A leading privacy token, Monero hides users' identities when transacting.
Privacy coin Monero has increased by 32% in the past day to a price of $316 per coin. The sudden rise in Monero's price comes a day after the U.S. Treasury announced that starting in 2023, crypto transfers above $10,000 should be reported to the tax office.
Monero obscures the origins of transactions to preserve its users’ identities. It’s popular among those who use cryptocurrencies on the black market and is the only currency accepted by one of the most popular darknet markets, White House.
If the U.S.’s tax office, the Internal Revenue Service, can’t trace Monero transactions, it can’t prosecute anyone who flouts the rules. That logic may have been enough to pump the price of the coin.
With a market cap of $5.3 billion, Monero is now the 28th largest cryptocurrency by market cap.
However, things may not be so simple. Blockchain analysis firm Ciphertrace has patented software it claims can trace Monero transactions, and competitor Chainalysis landed a $625,000 contract from the IRS to work out how to trace transactions.
Monero is still down roughly 21% in the past week despite the price bump, according to data from Nomics.
Like all of the top coins, Monero crashed after three major Chinese bankings and payments firms reiterated that they would not transact with companies that engage in cryptocurrency transactions.
The payments giants—National Internet Finance Association of China, China Banking Association, and the Payment and Clearing Association of China—also warned against speculative crypto trading, which “seriously infring[es] on the safety of people's property and disrupt[s] the normal economic and financial order.”
Combined with Tesla and SpaceX CEO Elon Musk’s criticism of Bitcoin on Twitter, the statements tanked the market.
Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe
— Elon Musk (@elonmusk) May 13, 2021
Bitcoin's price fell as low as $30,415 on Wednesday before recovering to its current price of about $40,000. Monero sunk to lows of $198, its lowest price since February.
But for now, the coins are back up.