Macroeconomic and political stress are driving investors toward censorship-resistant crypto assets, according to Jake Kennis, senior research analyst at Nansen.
Kennis told DL News that three key forces are converging to turn privacy from a speculative corner of crypto into a durable institutional theme: political tension, regulatory tightening, and the maturation of zero-knowledge technology.
Crypto privacy tools have evolved from “experimental to deployable” because ZK technology has significantly matured, as institutions like venture capital giant Andreessen Horowitz have described it as crypto’s “most important moat”, Kennis said.
Kennis’s call comes as the US Treasury Department acknowledged in a new March report that crypto privacy tools such as token mixers that mask transactions and identities can serve “legitimate financial privacy purposes.”
“Lawful users of digital assets may leverage mixers to enable financial privacy when transacting through public blockchains,” the report told Congress.
The language marks a notable recalibration in tone and is the latest signal of the Trump administration’s relaxing attitude toward the industry.
In August, the Department of Justice said it would stop aggressively pursuing future charges against developers building privacy-focused crypto tools.
Privacy performance
Privacy-focused crypto tokens had a stellar run in 2025 before sinking alongside crypto’s $2 trillion wipeout.
Zcash soared nearly 2,000% from August to September. Then the core development team quit, and the price crashed by over 65%. Monero had a similar meteoric rise and fall, reaching a new all-time high of nearly $800 in January before plunging back under $300.
Still, Kennis said there are plenty of privacy-focused crypto projects in investors’ crosshairs.
“Capital is flowing to projects like Railgun, Nocturne, Zama, Aleo, and Nillion, targeting compliant privacy for tokenization, payments, trade finance, and custody rather than just the most liquid privacy coins,” he said.
“There is a large playing field here for this sector and a path to grow.”
Risks
The Treasury does not gloss over the risks associated with private crypto transactions.
Its report discloses that billions in digital assets stolen by North Korean actors between early 2024 and late 2025 flowed through complex laundering chains that often included transaction mixing services, which shield users.
Since mid-2020, more than $1.6 billion in deposits from mixers has moved into crypto bridges, with a substantial concentration tied to a single bridge that was scrutinised for failing to intervene in swaps linked to sanctioned actors, the report said.
Treasury also highlights the interactions among mixers, stablecoins, and cross-chain infrastructure. While direct deposits of stablecoins into mixers for illicit purposes appear low, the Treasury notes that criminal actors frequently route other tokens through mixers before converting into stablecoins to break tracing links prior to fiat off-ramps.
Adding to the pressure on privacy, lawmakers in the European Union have approved legislation that will prohibit crypto exchanges from listing privacy-focused tokens such as Zcash and Monero, citing concerns about anti-money-laundering. The measure is scheduled to take effect in 2027.
At the same time, regulators across the US and Europe have intensified enforcement actions against developers of privacy-focused tools.
In the Netherlands, Tornado Cash developer Alexey Pertsev was convicted of money laundering in 2024 after prosecutors argued his software enabled criminals to obscure stolen cryptocurrency.
Authorities in the US have pursued similar cases.
Tornado Cash co-founder Roman Storm was found guilty of operating an unlicensed money-transmitting business, while Samourai Wallet developer Keonne Rodriguez received the maximum five-year prison sentence on comparable charges.
