The debate around financial privacy is undergoing a significant shift. A growing chorus of advocates argues that privacy coins are not the radical innovation in this story; rather, they are a necessary response to the relatively recent experiment with “surveillance money” conducted by traditional banks, public blockchains, and Central Bank Digital Currencies (CBDCs). This discussion is crucial for traders and institutional treasuries as it directly impacts market liquidity, asset traceability, and compliance risk.
A Return to Financial Normality
For thousands of years, monetary transactions were conducted in private, from bronze coins to paper banknotes, leaving no permanent, searchable record for third parties. The current era of financial surveillance, where banks and governments track and can even freeze transactions, is a dramatic departure from this long-standing norm that only began in earnest in the mid-20th century.
Privacy-focused cryptocurrencies like Monero (XMR) and Zcash (ZEC) are, in this view, simply a digital restoration of this historical standard. They aim to return fungibility and confidentiality to payments using advanced cryptographic techniques. As one commentator notes, “The real aberration isn’t private crypto; it’s the assumption that every financial transaction should be visible to third parties”. This is especially critical in authoritarian regimes or unstable economies, where private digital cash can be the only safe way to store and transfer value.
The Three Fronts of Surveillance Money
The term “surveillance money” encompasses several modern developments that have eroded financial privacy. The first is the traditional banking system, which, since the 1970s, has built an infrastructure for comprehensive financial surveillance under the guise of fraud prevention and anti-money laundering laws.
The second front includes public blockchains like Bitcoin and Ethereum. While pseudonymous, their transparent ledgers permanently record all transactions, making them susceptible to analysis that can de-anonymize users. Finally, Central Bank Digital Currencies (CBDCs) represent a significant step towards state-controlled traceability. Unlike cash, these government-issued digital currencies are designed to be traceable from day one, with the potential for granular visibility and programmable controls over how and where money can be spent.
The Practical Battlefield for Traders and Treasuries
This clash of philosophies has tangible consequences in today’s markets. On one hand, the demand for financial privacy is robust. In 2025, global transactions involving privacy coins surpassed $250 billion, a 17% increase from the previous year, and they are now used in 11.4% of all global cryptocurrency transactions. Monero alone holds 58% of the total privacy coin market capitalization.
On the other hand, regulatory pressure is intensifying. A reported 97 countries had implemented stricter compliance frameworks by early 2025, leading to a wave of exchange delistings. Major platforms have removed privacy coins like XMR and ZEC, affecting liquidity and access for institutional and retail traders alike. This creates a complex risk landscape: treasuries must weigh the competitive advantages of holding fungible, private assets against the real risks of limited custody options and higher compliance costs in a tightening regulatory environment.
The narrative is flipping. The radical position is not the desire for private transactions, a condition humanity lived with for millennia, but the modern expectation of total financial transparency. For market operators, navigating this tension between privacy and oversight will be a defining challenge in the cycles to come.
