The surge in privacy coins in late 2025, which continued in 2026 with Monero hitting new highs, is seen as signalling renewed investor demand for on-chain anonymity. Analysts and industry leaders argue that privacy is evolving from untraceable transfers to selective disclosure and becoming core infrastructure for Web3.

PRIVACY AS THE MODERN ‘BANK ACCOUNT’
The resurgence of privacy-centric assets, which began in the final quarter of 2025, shows no signs of slowing—at least for Monero ( XMR) and, to a lesser extent, Zcash (ZEC). That rally saw both coins finish the year as the top performers, with ZEC leading. However, since the start of 2026, XMR appears to have seized the initiative, breaking past its previous peak and setting a new all-time high.

Analysts suggest that, if the strong price action in early 2026 is any indication, privacy coins are poised to dominate once again. Should this trend continue, it would reinforce the narrative that investor sentiment is shifting decisively toward on-chain anonymity.

Yet as crypto becomes part of everyday life, wallets are evolving beyond speculative trading into primary digital bank accounts. Sonny Liu, CMO at Mixin, argues that privacy is essential for this transition. Without it, every transaction permanently exposes a user’s financial history and behavioral patterns.

Liu notes that while the first era of privacy coins focused on untraceable value transfer, the next phase is about selective disclosure.

“From a broader perspective, this evolution is inevitable. Crypto is moving from a fully transparent value ledger toward a private yet verifiable digital infrastructure. In 2026, the most resilient privacy projects will not be those pursuing extreme anonymity in isolation, but those embedding privacy as a foundational capability—protecting user boundaries while remaining compatible with compliance, finance, and data needs. Privacy is no longer a confrontational feature; it is becoming core infrastructure for Web3.”

Products like Mixin Messenger, he adds, demonstrate how “secrets-as-a-service” can move privacy beyond hiding money to protecting everything that matters in a digital society.

Still, with 2026 shaping up as the year of the “compliance contest,” some fear privacy coins will struggle to uphold their ethos of anonymity under pressure from fiat off-ramps eager to comply with AML and KYC standards. Varun Kabra, Chief Growth Officer at Concordium, believes survival depends on separating privacy from anonymity:

“Users should be able to cryptographically prove legitimacy to fiat off-ramps without revealing identities or full transaction histories. In 2026, the protocols that succeed won’t be the loudest about anonymity; they’ll be the best at privacy with accountability—ensuring compliance, but on the user’s terms.”

Liu agrees that privacy and compliance are not inherently at odds. The real tension, he argues, arises when compliance relies on indiscriminate data collection and centralized surveillance. Regulators, he says, need verifiable assurances that rules are followed—not total visibility into every user’s activity. Compliance should occur at the interface layer while protocols remain neutral, permissionless and privacy-preserving.

REGULATORY HEADWINDS: DAC8 AND REGIONAL BANS
The European Union (EU)’s Directive on Administrative Cooperation ( DCA)8, effective Jan. 1, 2026, requires crypto-asset service providers (CASPs) to report detailed transaction data, user identities and tax IDs for EU users. This poses challenges for CASPs, which cannot accurately report privacy coin transactions. As a result, some may delist or restrict them. Liu warns that DAC8 could temporarily weaken the “herd effect” that strengthens obfuscation in Monero and Zcash.

Nevertheless, like other experts, Liu predicts that demand for privacy will push users toward decentralized exchanges, Layer 2 protocols and self-custody tools. Over time, anonymity sets are expected to evolve from fragile reliance on centralized on-ramps into robust, censorship-resistant networks of decentralized pools.

Meanwhile, the United Arab Emirates (UAE)’s recent move formalize a ban on privacy coins has raised concerns about a global precedent. Yet, both Liu and Kabra argue the move is not a wholesale rejection and unlikely to trigger worldwide bans.

“This is not a signal flare for global follow-through, but a localized storm,” Liu explains. “Global hubs will respond selectively to FATF pressures, but not collectively march toward full bans. The rigid demand for privacy will ensure it survives and evolves in dispersed ecosystems.”

Kabra concludes that the path forward lies in building privacy-first infrastructure that regulators can trust and users can control. Protocols that strike this balance, he says, will attract both individuals and institutions.