Privacy Coin goes wild! Before the EU ban in 2027, Zcash's market capitalization skyrocketed to 7 billion.

Bitcoin has plummeted nearly 30% from its historical high to $90,000, but Privacy Coins have soared against the trend, with Zcash's market capitalization skyrocketing from $800 million on August 10 to over $7 billion in early November. This surge occurred against the backdrop of unprecedented regulatory pressure: nearly 60 Privacy Coins will be delisted from centralized exchanges in 2024, the EU will ban licensed platforms from using Privacy Coins by 2027, and the FATF continues to exert pressure on AML rules.

An Outlier in the Market Crash: Zcash Surges 700% Against the Trend

(Source: Trading View)

The total market capitalization of cryptocurrencies fell from a peak of over $4.3 trillion in early October to just above $3.1 trillion, a decline of about 25%-28%, with the price of Bitcoin dropping nearly 30% from its historical high. In this context, Privacy Coins have become one of the strongest performing sectors. The market capitalization of Zcash surged from less than $1 billion in August to over $7 billion in early November, with an increase of 600%-700%, briefly surpassing Monero to become the highest market capitalization Privacy Coin.

Even more striking is the surge in retail interest. Zcash has rapidly climbed to the top of the internal search rankings on Coinbase, with user searches surpassing those for Bitcoin and XRP, indicating a rise in attention from retail users. Analysts say that the dual effect of skyrocketing stock prices and soaring search volumes suggests a typical hot trade, but the complexity lies in the fact that this situation arises amidst increasing regulatory pressure, a wave of delistings from exchanges, and scrutiny related to sanctions.

According to the data, ZEC has increased by over 200% on some major exchanges within a month, achieving a percentage pump of up to three digits from the low point at the end of summer. Monero has also seen an increase, but the pump is far smaller than that of Zcash, which briefly allowed ZEC's market capitalization to surpass that of Monero. Despite the rebound, ZEC's trading price is still far below its historical peak.

Two Major Explanations for the Rise of Privacy Coins

Structural and Technical Factors: The decreasing issuance due to the halving process, along with the planned NU6.1 upgrade, will transfer more control over funds to token holders.

Narrative and Market Structure: Overly optimistic public price predictions, concerns about regulation, weak order books, and a relatively small portion of short squeezes in the market.

According to CoinGecko's classification data, even after the recent pump, the entire Privacy Coin industry is valued at only around 30 billion to 35 billion, accounting for about 1% of the total market capitalization of cryptocurrencies. This niche market characteristic makes it susceptible to extreme volatility.

Regulatory Crackdown: 2027 EU Ban and Delisting of 60 Exchanges

The counter-trend rise of Privacy Coins occurs against the backdrop of a rapidly deteriorating regulatory environment. Since 2019, the Financial Action Task Force (FATF) has applied its entire Anti-Money Laundering and Counter-Terrorist Financing standards to virtual assets, including the Travel Rule, which requires that eligible transfers must include information on the originator and beneficiary. The assessment in 2024 found that about three-quarters of the assessed jurisdictions still partially or completely do not comply with Recommendation 15.

In Europe, the direction of development is becoming clearer. According to Regulation 2024/1624, the new AML rules across the EU will prohibit the use of anonymous cryptocurrency accounts and Privacy Coins on licensed platforms before 2027. Cryptocurrency service providers will be required to implement bank-like AML controls, verify the beneficial owners behind the wallets interacting with their services, and gradually cease support for fully anonymous tools.

The regulatory environment has begun to reshape the trading locations and methods of Privacy Coins. In 2024, the number of Privacy Coins delisted from centralized exchanges approached 60, the highest figure since 2021. Monero experienced the most removals, with Zcash and several other cryptocurrencies also affected. Binance restricted or canceled users from multiple European jurisdictions from trading XMR, ZEC, and DASH, citing local regulations and compliance. Kraken announced at the end of 2024 that it would cease Monero trading and deposits for customers in the European Economic Area, with a withdrawal deadline by the end of the year, explicitly mentioning regulatory changes in the EU, including the framework for crypto asset markets.

Some countries have banned Privacy Coin trading as early as a few years ago. Japanese regulators urged exchanges to delist Monero, Dash, and Zcash in 2018, while South Korea has prohibited domestic exchanges from trading Privacy Coins since March 2021, forcing local platforms to completely delist them.

Liquidity Traps and Sanctions Spillover Effects

These delisting measures create a typical liquidity crisis. In a rising market, even if the inflow of funds is relatively small, a liquidity-strapped market can experience significant volatility. As trading shifts from large, well-capitalized venues to smaller or less regulated platforms, it will become more difficult for large investors to exit without impacting prices. This structure, which can facilitate a sudden price surge, may also increase the risk of short covering during the price decline.

Sanctions and law enforcement actions have added another layer of uncertainty. In 2022, the U.S. Treasury Department's Office of Foreign Assets Control imposed sanctions on Tornado Cash, accusing the Ethereum-based mixer of laundering billions of dollars, including funds linked to North Korea. By the end of 2024, a U.S. appeals court ruled that sanctions on immutable smart contracts exceeded the Treasury's authority. In March 2025, OFAC officially lifted the sanctions on Tornado Cash.

However, the legal risks have not disappeared. The developers of Tornado Cash are facing criminal lawsuits in multiple jurisdictions, with one co-founder convicted of operating an unlicensed money transfer business. Another case involving Samourai Wallet has also sent a similar signal. In November 2025, its founder was sentenced to several years in prison after pleading guilty in the United States to conspiracy to operate an unlicensed money transfer company, with prosecutors alleging that over $2 billion in Bitcoin flowed through the service.

For compliance teams, the line between infrastructure and funds transfer tools is difficult to define. Some AML service providers and policy agencies now classify Privacy Coins, mixers, and some high-risk decentralized financial tools into the same high-risk category. Under the pressure of the FATF and regulatory agencies in various countries, many companies tend to over-compliance.

Protest Trading or Fragile Bubble?

Analysts are divided on what this wave of Privacy Coin price surge signifies. Some believe it is a protest against the increasingly stringent on-chain monitoring, data-sharing rules, and sanction reviews. Others argue that it is a speculative spike occurring in a shrinking niche market at the end of the cycle, driven more by leverage and public opinion than by long-term demand.

It is worth noting that most illegal cryptocurrency transactions are not conducted through Privacy Coins. A crime report released by Chainalysis in 2025 indicates that by 2024, stablecoins will account for approximately 63% of all cryptocurrency transaction volumes related to illegal activities, surpassing Bitcoin and becoming the preferred cryptocurrency for many criminals.

In terms of technology, upgrades such as Zcash's NU6.1 funding changes and experiments with optional privacy layers on the mainnet may test whether stronger privacy protections can coexist with regulators' demands for traceability. Currently, Privacy Coins are caught in the crossfire of the long-standing debate over financial privacy and increasingly stringent global AML and sanctions mechanisms. Understanding legal, liquidity, and enforcement risks is crucial for understanding how this space operates.