By 2025, privacy coins are at a crossroads. Once seen as the ultimate tool for financial freedom, they’re now caught between powerful governments, strict financial rules, and users who still need anonymity. Monero and Zcash-the two biggest names in this space-aren’t just fighting technical challenges anymore. They’re fighting for survival.
What Privacy Coins Actually Do
Privacy coins aren’t just another type of cryptocurrency. They’re built to hide who sent money, who received it, and how much was transferred. Unlike Bitcoin, where every transaction is public and traceable, privacy coins scramble that data using advanced cryptography.
Monero does it by default. Every single transaction uses ring signatures to mix your coins with others, stealth addresses to create one-time receiver addresses, and confidential transactions to hide the amount. There’s no option to turn it off. It’s all or nothing.
Zcash is different. It gives you a choice. You can send transactions publicly, like Bitcoin, or use something called zk-SNARKs to shield them. Only about 5% of users actually use the shielded feature, according to 2025 data. That means most Zcash transactions are still visible-making it less private than Monero, but easier for regulators to tolerate.
Why Regulators Are Coming After Them
It’s not that privacy coins are inherently illegal. But they make it harder for authorities to track money linked to crime. Chainalysis found that in 2024, privacy coins made up just 0.34% of all crypto transactions-but were involved in 38% of all law enforcement cases. That mismatch is what got their attention.
By 2025, 97 countries had updated their rules to target privacy coins. The Financial Action Task Force (FATF), the global standard-setter for anti-money laundering, now requires exchanges to collect sender and receiver details for any transfer over $1,000. Privacy coins can’t do that without breaking their core design.
That’s why major exchanges dropped them. Kraken removed Monero in 2023. Bittrex followed. Even Coinbase, which still lists Zcash, limits its trading pairs. The message is clear: if you can’t comply with the Travel Rule, you’re off the platform.
Market Shifts and Real Numbers
The market has reacted. In January 2023, privacy coins had a combined market cap of $6.4 billion. By January 2025, that number had dropped to $3.8 billion-a 41% decline. Daily trading volume fell from $492 million to just $187 million.
Monero, the most private, now holds 54% of the privacy coin market with a $2.1 billion cap. Zcash, with its optional privacy, sits at 31% with $1.3 billion. Dash and Pirate Chain split the rest. But those numbers don’t tell the whole story.
Monero’s blockchain has grown to 175 GB. That means running a full node requires serious storage and memory. Zcash’s blockchain is smaller-65 GB-but its shielded transactions use 40% more computing power, slowing things down. During peak times in early 2025, Zcash shielded transactions took 22 minutes to confirm. In 2023, it was 10.
Who’s Still Using Them?
Despite the crackdown, people still need privacy. Ukrainian NGOs used Monero to send aid during the 2024 conflict without exposing donors to retaliation. Journalists in Hong Kong used it to receive tips during protests. Activists in authoritarian states rely on it to avoid surveillance.
On the enterprise side, Zcash found a niche. JP Morgan’s Onyx blockchain started using Zcash Enterprise in 2024 for confidential institutional settlements. It’s not about hiding crime-it’s about protecting business secrets. A pharmaceutical company in Switzerland uses it to keep supply chain payments private from competitors.
But these use cases are rare. Only 12 Fortune 500 companies experimented with privacy coins in 2024-and almost all of them used Zcash, not Monero. The rest? Mostly individuals in places like Switzerland, Singapore, and decentralized online communities.
The Regulatory Tightrope
Some experts say privacy coins are doomed. Alex Thorn from Galaxy Digital warned that the EU’s MiCA Phase 2 rules, set to take effect in 2027, will ban anonymous crypto wallets entirely. That would kill Monero in Europe’s $1.2 trillion crypto market.
But others see a path forward. Dr. Elaine Wu from MIT proposed a new model: Privacy-Preserving AML. Instead of revealing transaction details, systems could use zero-knowledge proofs to prove a transaction is clean-without showing who sent it or how much. Switzerland’s FINMA is already testing this with Monero developers.
Zcash’s new Canopy+ Compliance Module lets institutions automatically disclose transaction data when legally required. But adoption? Less than 10%. Most users don’t want to give up privacy just because a regulator asks.
Monero’s community proposed something called Regulatory Node Clusters-optional nodes that share metadata with authorities without breaking the network’s privacy. Critics say that could lead to centralization. Supporters say it’s the only way to stay legal.
Getting Started Is Harder Than Ever
If you’re trying to use privacy coins today, it’s not simple. A 2025 Altrady survey found new users spend an average of 11.3 hours just to complete their first private transaction. That’s over five times longer than sending Bitcoin.
You need a non-custodial wallet-like Monero’s GUI Wallet or ZecWallet. But if you’re in Australia, South Korea, or Dubai, you can’t even buy them on centralized exchanges anymore. So you turn to decentralized options: AtomicDEX, Haveno, or Flashift.app’s no-KYC swaps. Those come with 2.5-4.1% higher fees and slower speeds.
Even wallet support is declining. Cake Wallet, a popular Monero wallet, saw its Trustpilot rating drop from 4.1 to 3.2 in 2025 because of “increased transaction failures on regulated networks.”
The Split Is Already Happening
The future isn’t one path-it’s two.
On one side: Monero. It’s staying true to its roots. No compromises. That means it’s vanishing from exchanges, moving to peer-to-peer networks, and becoming the coin of choice for those who need total anonymity. Bernstein analysts predict 65% of its current usage will shift to darknet markets by 2027.
On the other: Zcash. It’s adapting. It’s working with institutions. It’s building compliance tools-even if few use them. It’s the only privacy coin with enterprise partnerships. Bernstein projects a 300% growth in institutional use by 2026.
By 2027, you won’t see privacy coins as one category. You’ll see two: the defiant and the compliant.
What’s Next?
The FATF updated its guidance in April 2025 to say privacy-enhancing technologies can coexist with AML-if properly designed. That’s a crack in the wall. But it’s not an invitation. It’s a challenge.
Privacy coins aren’t going away. But their role is changing. They’re no longer just about freedom from surveillance. They’re about proving they can be trusted within a system designed to stop them.
For users: if you need real anonymity, Monero is still the best. But you’ll need to accept the trade-offs: harder access, higher fees, fewer services.
For institutions: Zcash might be the only viable option-if you can get past the complexity and low adoption of its privacy features.
The question isn’t whether privacy coins will survive. It’s whether they can evolve without losing what makes them valuable in the first place.
Are privacy coins illegal?
No, privacy coins are not illegal in most countries. But many jurisdictions have banned exchanges from listing them or require strict compliance with anti-money laundering rules that privacy coins can’t meet. Countries like Japan, South Korea, and Australia have outright bans on trading them. The EU will ban anonymous crypto wallets starting in 2027.
Can I still buy Monero or Zcash in 2026?
Yes, but it’s harder. Most major exchanges like Coinbase and Kraken have limited or removed trading pairs. You’ll need to use decentralized exchanges (DEXs) like Haveno or AtomicDEX, or peer-to-peer platforms. These often have higher fees and slower transactions, but they don’t require KYC. Some users also use atomic swaps to trade directly between wallets.
Why is Zcash more accepted than Monero?
Zcash offers optional privacy. You can choose to make transactions public, which lets it comply with some regulatory requirements. Monero hides everything by default, making it impossible to trace. Institutions like JP Morgan use Zcash Enterprise because it can be configured to disclose data when legally required. Monero can’t do that without breaking its core design.
Do privacy coins have a future in banking?
Only if they adapt. Zcash is already being used by some financial institutions for confidential settlements. Monero has no institutional adoption because of its strict privacy. The future for banking lies in hybrid models-like zero-knowledge proofs-that verify transactions without revealing details. Switzerland is testing this. If it works, privacy coins could re-enter regulated finance.
Is it safe to use privacy coins?
Technically, yes-they’re secure. But legally, it depends. In countries where they’re banned or restricted, using them could trigger scrutiny from regulators or even law enforcement. Wallets like Cake Wallet and Monero GUI are safe, but using them on regulated platforms can lead to account freezes. Always understand your local laws before using privacy coins.
What’s the difference between Monero and Zcash privacy?
Monero makes every transaction private by default using ring signatures, stealth addresses, and confidential transactions. You can’t turn it off. Zcash uses zk-SNARKs for optional privacy-you can choose to shield or unshield transactions. Most users leave them unshielded, making Zcash less private overall but more compliant with regulators.
How do privacy coins affect blockchain scalability?
They slow it down. Monero’s blockchain is large (175 GB) and requires more storage. Zcash’s shielded transactions use more computing power, increasing fees and reducing speed. Zcash handles 15 transactions per second; Monero does 20. Both are slower than Bitcoin or Ethereum, and regulatory crackdowns have reduced node participation, making confirmations even slower-up to 22 minutes for Zcash shielded transactions in early 2025.
Can governments shut down privacy coins completely?
Not entirely. Because they’re decentralized, there’s no central server to shut down. Governments can ban exchanges, freeze wallets, and criminalize use-but users can still trade peer-to-peer, use decentralized networks, or run their own nodes. The most likely outcome is that privacy coins will become underground tools, used mainly by those who need anonymity, not by the general public.
