Should financial privacy be absolute or should it bend to regulators when required, is a question that has long simmered in crypto circles, but recent conversations with industry insiders reveal just how deep the divide has become.
On one side, there are builders who believe privacy must evolve into selective disclosure systems that satisfy compliance requirements while still protecting users and on the other are advocates who argue that privacy which can be switched off isn't privacy at all, but surveillance with extra steps.
Both sides claim to represent crypto's future. They can't both be right.
The Case For Evolution
One camp believes privacy coins proved a point but are now hitting a wall.
Strong cryptography and untraceable transactions are technically possible, the argument goes, but fully opaque systems have been locked out of regulated finance.
The EU's MiCA framework, Dubai's January 2026 ban, and 73 exchange delistings in 2025 alone have made the message clear.
The answer, proponents say, is selective disclosure or privacy by default, with controlled transparency when compliance demands it.
Zero-knowledge proofs can verify that anti-money laundering conditions are met without exposing underlying transaction data.
Rob Viglione, founder of zkVerify and CEO of Horizen Labs, said interest in privacy reflects a structural shift rather than speculative cycles.
In his view, privacy is increasingly being treated as a requirement for real-world financial usage, not a niche feature tied to individual tokens.
"The path to legitimacy isn't 'no privacy,' it's selective disclosure: privacy by default for users, with controlled disclosure for regulatory compliance," he said.
Lacie Zhang, market analyst at Bitget Wallet, who said privacy is becoming system-level rather than asset-level.
She noted that fully transparent blockchains struggle to support payments, payroll, and commercial activity at scale, forcing the industry to rethink privacy as foundational infrastructure.
Tools such as zero-knowledge proofs and view keys, she said, are reframing privacy as compatible with regulation rather than opposed to it.
The industry isn't resisting oversight, she argued, but reframing confidentiality as compatible with regulation rather than opposed to it.
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The Case For Resistance
The opposing camp sees accommodation as surrender.
Privacy tools should work despite governments, not with them, much like Tor has done for decades.
They point to Monero's (XMR) market performance as vindication.
The privacy coin hit an all-time high above $797.73 in early 2026, having surged 400% since Binance delisted it in 2024. The more regulators squeeze, the higher it climbs.
Seth for Privacy, COO at CakeWallet, rejects the idea that privacy must bend toward compliance.
He describes Monero as financial freedom technology, comparable to Tor, designed to function regardless of geopolitical pressure or regulatory approval.
From that perspective, growing scrutiny does not weaken privacy coins, it reinforces their relevance as Bitcoin (BTC) and Ethereum (ETH) integrate deeper into the legacy financial system.
"While some coins like Bitcoin and Ethereum become more and more grafted into the legacy financial system, coins like Monero have gone the opposite way," he said. "Regulatory approvals come and go, but clear market demand for private payments is not going away."
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