Why Zcash and Privacy Tokens are Back in Conversation

Privacy-focused cryptocurrencies have come under 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 in privacy coins, their value has risen by 52.2% in the past 24 hours. Rival data aggregator CoinMarketCap puts the category at nearly $55 billion, along with Zcash (ZEC) are now leading the pack.

One of the first privacy-focused cryptocurrencies, Zcash launched in October 2016. It traded below $80 in early October, but exploded 375% over the month to reach $380 by Halloween, flipping Monero (XMR) as the largest privacy token by market capitalization.

Governments have weighed measures such as the European Union’s “Chat Control” proposal that could force the scanning of encrypted messages, while Meta has resumed training AI models on European user data. As concerns about data surveillance grow, privacy technologies are back in focus.

The big month of Zcash and the increase in supply shocked

Zcash and other privacy tokens have surged even as the broader cryptocurrency market struggles to recover from US President Donald Trump’s tariff threats in early October against China and a $19 billion settlement event.

But the privacy trend isn’t just based on speculation. It coincided with an increase in Zcash’s “shield supply” and a wave of adoption driven by new wallet technology that made private transactions more accessible.

“The focus is shifting towards projects that are not launching tokens just for the sake of it, but are building privacy technologies such as zero-knowledge systems powered by real incentives. These systems can provide privacy automatically without requiring users to make explicit choices about anonymity,” Carter Feldman, founder and CEO of the ZK-proof-based blockchain protocol Pintelegraph told Cointelegraph.

At the heart of Zcash’s privacy model is the masked address, which uses zero-knowledge proofs (specifically zk-SNARKs) to hide the sender, recipient and transaction amount. Transactions sent between screened addresses enter a pool for privately traded coins. As this pool grows, the network’s anonymity sector expands, strengthening privacy guarantees for all who use it.

That armored pool is now the largest it has ever been, closing in at 4.9 million ZEC.

Developer Zcash Electric Coin Company cleared up new functions in its Zashi wallet to start October, which will allow users to carry out inter-chain exchanges and private payments through an integration with the Near Intentions system. This means that users will be able to easily move value in and out of Zcash’s privacy layer, without going through centralized exchanges or complicated bridge interfaces.

Related: What if quantum computers have already broken Bitcoin?

This newfound ease of use helped drive the expansion of the shielded pool throughout October. Zcash activity in Near Intents exploded at the beginning of October, including more than $17 million on October 16 alone.

However, the boom comes with caveats. Researcher ZachXBT pointed out that Zashi’s integration with Near Intents might not completely obscure transaction paths, suggesting that crosschain privacy also has traceable links.

“I contacted the Zashi team and they informed me that they plan to fix this privacy issue by adding ephemeral addresses soon and eventually protect Near Intent refunds,” ZachXBT. he said.

Zcash is growing behind global privacy trends

Around the world, privacy is at the center of political and technological debates as governments introduce controversial surveillance proposals, while companies push deeper into data AI models.

“The regulatory review has paradoxically clarified the value proposition for compliant privacy solutions,” Marko Stokić, head of AI at Oasis Protocol, told Cointelegraph.

“The industry is working on how to implement privacy in ways that serve the legitimate needs of users while remaining accountable. This has driven the demand for programmable privacy, where information can be protected by default but disclosed when legally required or contextually appropriate,” he added.

Related: EU chat control depends on Germany’s decision

In Europe, EU lawmakers have moved away, at least for now, from the controversial “Chat Control” proposal that would have messaging services forced to scan encrypted chats for illegal material. Meanwhile, Meta started will train its generative AI models using European users’ Facebook and Instagram data, but has promised that private messages will not be included.

Across the Atlantic, privacy rules in the US remain a patchwork. States like California, Colorado and Virginia have strengthened their protections, while efforts in Congress to pass a national law remain.

These global trends have intensified the fear and fascination with digital privacy. As governments weigh invasive tools to monitor online behavior and companies collect more data, privacy technologies have been reimagined as market opportunities.

“The biggest misconception is to confuse privacy with crime or assuming that compliance and privacy are mutually exclusive. Well-designed systems can protect sensitive information during normal operations while remaining auditable when necessary,” said Stokić.

Why privacy is more important to crypto users now than ever

Anonymity once belonged to cypherpunks and traders who distrusted regulators.

“Privacy is not a niche function for people who have 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 controls, exchange monitoring 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 portfolios and predict when assets will move to exchanges.

Governments are also strengthening control. On August 18, the US Treasury Department asked for public input on AI, blockchain monitoring, digital identity credentials and “privacy-enhancing tools” to detect illicit activity involving digital assets. The agency said the feedback will inform new guidance and potential rules 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 wallet control verification. These obligations entered into force on December 30, 2024.

For many users, that mix of surveillance and scrutiny is a signal to look for privacy encryption.

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