Privacy tokens, such as Zcash, have seen a rise while the overall cryptocurrency market capitalization and Bitcoin have significantly declined.
This rebound occurs against a backdrop of tightening policies, with the FATF applying pressure, new EU anti-money laundering rules, and an increasing number of privacy coins being delisted.
Sanction cases and prosecutions involving mixers and wallets have raised questions about the boundaries between infrastructure and fund transfers, pushing compliance teams towards cautious de-risking.
Analysts have differing views on this movement; some see it as a protest trade against surveillance, while others view it as a fragile late-cycle surge in a high-risk corner of the market.
In the past six weeks, the cryptocurrency market has evaporated over $1 trillion, with traders pulling out of speculative assets. The total market capitalization has dropped from a peak of over $4.3 trillion in early October to just above $3.1 trillion, a decline of about 25%-28%.
Bitcoin has fallen nearly 30% from its historical high of over $126,000 in early October, currently trading just above $90,000.
In this context, one of the strongest-performing areas is also the most volatile category: privacy tokens. Zcash (ZEC) has risen several hundred percent since late summer, with its market capitalization increasing from less than $1 billion in August to over $7 billion in early November. At one point, it surpassed Monero (XMR) to become the largest privacy coin by value.
Meanwhile, Zcash has jumped to the top of Coinbase's internal search rankings, surpassing Bitcoin (BTC) and Ripple (XRP) in user queries, indicating a surge in retail interest.
Analysts say the combination of sharp price increases and rising search interest looks like a classic hot trade. The complexity lies in the fact that this is happening in a market segment facing increasing regulatory pressure, exchange delistings, and scrutiny related to sanctions.
Did you know? Most dirty cryptocurrencies do not flow through privacy coins. Chainalysis's 2025 crime report states that stablecoins account for about 63% of all crypto transaction volume related to illegal activities in 2024, surpassing Bitcoin to become the preferred cryptocurrency for many criminals.
The latest trend is clearly led by Zcash, with Monero following closely behind.
Key numbers pointed out by analysts:
ZEC has risen over 200% in about a month across several major venues.
From the late summer low, ZEC's peer-to-peer movement has reached high triple-digit percentage increases.
Monero has also seen an increase, but to a much lesser extent than ZEC, allowing ZEC to briefly surpass it in market capitalization.
Despite the rebound, ZEC's trading price remains far below its historical peak.
Explanations fall into two main camps:
One group focuses on structure and technology, including the decrease in issuance as the halving process progresses and the planned NU6.1 upgrade, which will transfer more control of funds to token holders.
The other group focuses on narrative and market structure, including highly optimistic public price predictions, concerns about surveillance, weak order books, and short squeezes in relatively small parts of the market.
Most observers agree that the rebound comes at a time when regulatory and policy trends are turning against assets that enhance anonymity.
Did you know? Even after the recent rebound, the entire privacy coin industry is valued at about $30 billion to $35 billion, accounting for about 1% of the total cryptocurrency market capitalization, according to CoinGecko's category data.
On a global level, privacy tokens are at the heart of the anti-money laundering (AML) debate.
Since 2019, the Financial Action Task Force (FATF) has applied its full AML and counter-terrorist financing (CFT) standards to virtual assets and virtual asset service providers (VASPs), including travel rules that require qualified transfers to include information about the originator and beneficiary.
A targeted update in 2024 found that about three-quarters of assessed jurisdictions still only partially comply with Recommendation 15, and about 30% have not yet implemented travel rules in law. The FATF also noted that the increasing use of cryptocurrencies that enhance anonymity by illegal actors is a specific concern.
In Europe, the direction is clearer. According to legal and policy analysis, new EU-wide AML rules will prohibit the use of anonymous crypto accounts and privacy coins on licensed platforms by 2027.
Crypto asset service providers will be required to apply bank-like AML controls, verifying the actual owners behind wallets interacting with their services, and gradually phasing out support for fully anonymous tools.
This does not mean that these assets become illegal to hold everywhere. But it does mean that in most regulated financial systems, the infrastructure is being redesigned, assuming that privacy tokens will be restricted or excluded.
The regulatory backdrop has begun to reshape where and how privacy tokens are traded.
Key changes:
In 2024, the number of delistings of privacy tokens on centralized exchanges approached 60, the highest number since 2021.
Monero accounted for the largest share of delistings, with Dash (DASH) and other tokens also affected as exchanges reassess their AML policies.
Binance has restricted or removed user trading of XMR, ZEC, and DASH in several European jurisdictions due to local regulations and compliance.
Kraken announced at the end of 2024 that it would stop offering Monero trading and deposit services to customers in the European Economic Area (EEA), setting a withdrawal deadline for the end of the year and explicitly mentioning EU regulatory changes, including the Markets in Crypto-Assets (MiCA) framework.
These steps could create a classic liquidity dilemma. Weak markets may experience severe volatility during rebounds due to relatively small inflows of capital. As trading shifts from larger, well-capitalized venues to smaller or less regulated platforms, larger holders may find it difficult to exit without impacting prices. The same structure that can trigger sudden surges may also increase the risk of blanks appearing during downturns.
Did you know? Some countries banned trading privacy coins years ago. Japanese regulators pushed exchanges to delist Monero, Dash, and Zcash in 2018, while South Korea began banning domestic exchanges from trading privacy coins in March 2021, forcing local platforms to delist these tokens entirely.
Sanctions and enforcement actions add another layer of uncertainty.
In 2022, the U.S. Treasury's Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, accusing the Ethereum-based mixer of laundering billions of dollars, including funds related to North Korea. At the end of 2024, a U.S. appeals court ruled that sanctions against immutable smart contracts exceeded the Treasury's authority, and in March 2025, OFAC formally rescinded these designations.
However, legal risks have not disappeared. Developers of Tornado Cash face criminal lawsuits in multiple jurisdictions, with one co-founder convicted of operating an unlicensed money transmission business.
A similar signal was sent in a case involving Samourai Wallet. In November 2025, its founder was sentenced to several years in prison in the U.S. for conspiracy to operate an unlicensed money transmission business, with prosecutors alleging that over $2 billion in Bitcoin flowed through the service.
For compliance teams, the boundary between infrastructure and fund transmitters is difficult to delineate. Several AML providers and policy groups now place privacy coins, mixers, and some high-risk decentralized finance (DeFi) tools in the same high-risk category. Under pressure from the FATF and national regulators, many companies default to over-compliance by blocking deposits related to privacy tools, refusing listings, and limiting payment usage.
For users, this brings secondary risks. Even if specific tokens or protocols are not sanctioned, the surrounding ecosystem may still view them as too risky to touch.
Analysts have differing opinions on the actual signals of this rebound:
Some see it as a protest trade against increasing on-chain surveillance, data-sharing rules, and sanction screenings.
Others view it as a speculative surge in a shrinking niche market, driven more by leverage and narrative than by long-term demand.
Key policy milestones:
The EU AML rules that restrict or effectively ban privacy coins on licensed platforms are expected to come into full effect around 2027.
The FATF will continue to publish implementation reviews, with its latest report indicating that most jurisdictions still only partially comply with virtual asset standards and travel rules.
On the technical side, Zcash's NU6.1 funding change upgrade and experiments with optional privacy layers on the main network may test whether stronger privacy can coexist with regulators' demands for traceability.
Currently, privacy tokens are caught between the long-term debate on financial privacy and the intensifying global AML and sanctions regimes. Understanding the legal, liquidity, and enforcement risks is crucial for grasping how this space operates.
Related: Switzerland delays crypto tax information sharing until 2027
Original article: “Why Privacy Tokens Are Surging Against a Weakening Overall Market?”
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
