Privacy Coins Regulations: Monero and Zcash Restrictions in 2025

By 2025, if you're still using Monero or Zcash on a major exchange, you're probably one of the few left. The era of unchecked privacy in cryptocurrency is over. Governments didn't just raise eyebrows-they shut doors. And it wasn't because they hated privacy. It was because they couldn't track where the money went.

Why Monero and Zcash Got Targeted

Monero and Zcash were built to hide. Not to obscure, not to make things harder-to hide. Monero doesn't give you a choice. Every transaction uses ring signatures, stealth addresses, and RingCT by default. There's no "public mode." Even if you wanted to be transparent, the protocol won't let you. That’s the point. It’s like a bank that refuses to show who sent money to whom-even to the police.

Zcash is different. It lets you pick. You can send a shielded transaction using zk-SNARKs-zero-knowledge proofs that prove you have the money without revealing how much or where it came from. Or you can send a regular, public one, just like Bitcoin. Sounds fair, right? But here’s the catch: most people use the public option. And that’s why Zcash’s privacy is weakening. If only 8% of addresses are shielded, then every shielded transaction stands out like a flashlight in a dark room. Regulators don’t need to break the crypto-they just need to watch the outliers.

What Changed in 2025

The big shift came from the Financial Action Task Force (FATF). In early 2025, they expanded their Travel Rule to cover all privacy coins. That meant exchanges had to collect and share sender and receiver data for every Monero or Zcash trade. No exceptions. No "privacy by design" loophole. If you couldn’t comply, you got delisted.

Binance and Kraken pulled Monero and Zcash off their platforms in March 2025. Not because they wanted to. But because their banking partners threatened to cut them off. Banks don’t want to touch anything that can’t be traced. And with 97 countries now enforcing stricter crypto rules, exchanges had no choice. The result? A 19% jump in peer-to-peer (P2P) trading. People moved to LocalMonero, Bisq, and other decentralized platforms-especially in places like Nigeria, Argentina, and Ukraine, where inflation is high and trust in banks is low.

The European Union’s MiCA regulation made things worse. It forced exchanges to prove they could monitor all transactions. Privacy coins? Impossible. So EU-based exchanges dropped them. Some even stopped supporting Zcash’s shielded addresses entirely. That’s not a technical decision-it’s a legal one. If you can’t prove compliance, you’re not allowed to operate.

Where Privacy Coins Still Survive

Not everywhere is shutting them down. Singapore and Switzerland are quietly building sandboxes. These aren’t free-for-alls. They’re controlled environments where developers can test privacy tech under watchful eyes. Regulators get to see how it works. Developers get to keep building. It’s a compromise: privacy, but with oversight.

In places like Switzerland, you can still trade Monero on licensed platforms-but only if you’ve passed KYC. Your identity is known. The transaction isn’t. That’s the new model: know your customer, but not your transaction. It’s a weird middle ground, but it’s working-for now.

Meanwhile, darknet markets still rely on Monero. Fentanyl vendors on Abacus Market use it because it’s the only coin that can’t be traced back to a wallet. Law enforcement has tried to track the flow, but without public addresses or transaction history, they hit dead ends. That’s why regulators are pushing for new tools-like blockchain analysis firms claiming they can now "de-anonymize" Monero with AI patterns. Some experts say it’s hype. Others say they’ve found cracks in the ring signature mixing.

Why Zcash Is Struggling More Than Monero

Zcash has a branding problem. It’s marketed as a privacy coin, but most users treat it like Bitcoin. That’s not because the tech is bad-it’s because people don’t understand it. Shielded transactions require more computing power. They’re slower. They’re clunkier. And exchanges don’t promote them.

On top of that, Zcash’s team has been trying to add compliance features. They’ve been testing selective disclosure-where a user can prove to a regulator that a transaction is clean without revealing the full details. Think of it like showing a cop your license without handing over your entire wallet history. It’s technically possible. But no regulator has agreed to accept it. So Zcash is stuck in limbo: too private for banks, too public for privacy purists.

Monero, by contrast, doesn’t care. It doesn’t try to please regulators. It doesn’t offer a public option. That’s why it’s still alive on P2P networks. It’s not popular-it’s stubborn. And stubbornness works when the system is rigged against you.

The Future: Can Privacy and Compliance Coexist?

Some developers are trying to build a bridge. Zero-knowledge proofs are getting better. New protocols like Lelantus Spark (used by Firo) and Zcash’s upcoming upgrades aim to make shielded transactions faster and cheaper. The goal? Make privacy so easy that even normal users pick it.

But the real question isn’t technical-it’s political. Can a government allow a system where money moves without a paper trail? The answer right now is no. And until that changes, privacy coins will keep shrinking on exchanges, growing on the margins.

The next big move might come from central banks. If digital currencies (CBDCs) become widespread, they’ll demand full traceability. That could make privacy coins even more attractive to those who fear state surveillance. But it could also make them targets for outright bans-like China did with Bitcoin mining.

What You Can Do Now

If you still hold Monero or Zcash:

• Don’t keep them on an exchange. Move them to a wallet you control.
• Use a VPN or Tor if you’re trading P2P-your IP address is the new weak point.
• Learn how to send shielded Zcash transactions. Most wallets have a toggle-use it.
• Don’t assume privacy is guaranteed. Tools are improving. So are tracking methods.

If you’re thinking of buying privacy coins today-you’re not just investing in crypto. You’re betting on the idea that privacy still matters. And right now, that’s a lonely bet.