Cryptocurrencies focused on privacy have come on the radar of investors recently, ranking among the most popular token categories.
According to Coingecko, which tracks a combined market capitalization of nearly $22 billion across privacy coins, their value has increased by 52.2% in the past 24 hours. Rival data aggregator data puts the category at nearly $55 billion, including Zcash (Zec) now leading the pack.
One of the early privacy-focused cryptocurrencies, Zcash launched in October 2016. It traded below $80 at the start of October but exploded 375% in the month to reach $380 by Halloween, Flipping Monero (XMR) as the largest privacy token by market cap.
Governments have weighed measures such as the European Union’s “chat control” proposal that could force the scanning of encrypted messages, while Meta has continued to train AI models on European user data. As data tracking concerns grow, Privacy technologies are back in focus.
Zcash’s big month and the increase in shield supply
Zcash and other privacy tokens have boosted even the broader cryptocurrency market $19-billion liquidation event.
But the privacy trend isn’t just based on speculation. This coincides with an increase in Zcash’s “shielded supply” and a wave of adoption driven by new wallet technology that has made private transactions more accessible.
“The focus is shifting towards projects that don’t launch tokens just for the sake of it, but building privacy technologies like zero-knowledge systems powered by real incentives. These systems can provide privacy by default without requiring users to make explicit choices about anonymity,” Carter Feldman, Founder and CEO of the ZK-Proof-based Blockchain Psy Protocol, told Cointelegraph.
At the heart of Zcash’s privacy model is the shielded address, which uses zero-knowledge proofs (specifically ZK-SNARKS) to hide the sender, recipient and transaction amount. Transactions sent between shielded addresses enter a pool for coins that are private. As that pool grows, the network’s anonymity set expands, strengthening the guarantee of privacy for everyone who uses it.
The shield pool is now the largest it has ever been, closing at 4.9 million zec.
Zcash Developer Electric Coin Company roll New features in its Zashi Wallet to kick off in October, allowing users to perform cross-chain swaps and private payments through an integration with Nеar’s Intents system. This means that users can easily transfer value in and out of Zcash’s privacy layer, without going through centralized exchanges or complex bridging interfaces.
Related: What if quantum computers have already destroyed Bitcoin?
The new ease of use helped drive shield pool expansion throughout October. Zcash activity in the near future exploded at the beginning of October, with more than $17 million on October 16 alone.
However, the boom has caveats. Investigator Zachxbt pointed out that Zashi’s integration with nearby pursuits may not completely obscure transaction paths, suggesting that crosschain privacy still has traceable links.
“I contacted the Zashi team and they informed me that they plan to resolve this privacy issue by adding ephemeral addresses as soon as possible and eventually protected near refund requests,” Zachxbt said.
Zcash is cutting back on global privacy trends
Around the world, privacy is at the center of policy and tech debates as governments introduce controversial surveillance proposals, while companies push deeper into AI-gobbling AI models.
“The regulatory review inadvertently clarified the value proposition for the following privacy solutions,” Marko Stokić, head of AI at Oasis Protocol, told Cointelegraph.
“The industry is working through how to implement privacy in ways that serve legitimate user needs while remaining accountable. This has driven demand for programmable privacy, where information can be protected by default but disclosed when legally required or appropriate in context,” he added.
Related: Chat control in the EU depends on Germany’s decision
In Europe, EU lawmakers backed away, at least for now, from the controversial “chat control” proposal that would have Forced messaging services to scan encrypted chats for illegal material. Meanwhile, meta started Generative AI models are being trained using data from European Facebook and Instagram users, but have promised to exclude private messages.
Across the Atlantic, US privacy rules remain a patchwork. States like California, Colorado and Virginia have strengthened their protections, while efforts in Congress to pass a nationwide law remain stalled.
These global trends have intensified both fear and fascination with digital privacy. As governments weigh invasive tools to monitor online behavior and companies harvest more data, privacy technologies are being reimagined as market opportunities.
“The biggest misconception is to conflate privacy with criminality or to think that compliance and privacy are mutually exclusive. Well-designed systems can protect sensitive information during normal operation while remaining audible when necessary,” said Stokić.
Why privacy is more important to crypto users today than ever before
Anonymity once belonged to cypherpunks and traders who distrusted regulators.
“Privacy is not some niche feature for people with something to hide,” Feldman said.
“The real misconception is that we have to choose between privacy and usability, or between privacy and scale. Technology has advanced to the point where we can have both.”
Today, crypto operates under constant surveillance under know your customer checks, exchange tracking and advanced blockchain analytics.
Blockchain forensics specialists use machine learning to track wallets and build behavioral profiles. Their systems can link identities, map connections between wallets and predict whether assets will move across exchanges.
Governments are also tightly controlled. On August 18, the US Treasury Department requested public input on AI, blockchain tracking, digital identity credentials and “privacy enhancement tools” to detect illicit activity involving digital assets. The agency said the feedback will inform new guidelines and potential decisions under the Genius Act.
In the EU, crypto exchanges must treat transfers to or from self-hosted wallets as higher risk and apply enhanced due diligence, including verification of wallet control. These obligations entered into force on December 30, 2024.
For many users, the mix of surveillance and investigation is a signal to look into privacy-oriented cryptocurrencies.
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