Why is the Crypto Privacy Sector up 269% in 2025?

According to Artemis only 2 sectors of crypto ended up in pure green: exchange tokens and the privacy sector. So while CEX tokens saw a 16% uptick, the privacy sector went hyperbolic with a 269% increase — and in this article we’re breaking down why that happened. Let’s see what are the implications and how to profit off the crypto privacy sector in 2026. 

Sector Performance by type, Artemis, 1Y period. Source: artemisanalytics.com

Key Takeaways

1. In 2026, privacy will become the main factor in competition between blockchains, as speed and fees will no longer provide an advantage.
2. The public nature of all transactions makes the widespread use of cryptocurrencies impossible without built-in privacy mechanisms.
3. Private blockchains foster stronger user loyalty and sustainable network effects.
4. Centralized services and messengers do not provide real privacy — the future belongs to decentralized protocols without a single point of control.
5. Privacy allows the legitimacy of transactions to be confirmed without revealing users' complete financial history.
6. Complete transparency carries market risks, including front-running and strategy copying.
7. A balance between privacy and regulation is necessary to protect freedoms and develop the crypto industry.

Privacy as a competitive advantage for cryptocurrencies in 2026

Andreessen Horowitz notes in its research that privacy will be the key factor in competition between blockchains in 2026. The reason is that the usual technical advantages no longer work as a point of differentiation.

1. Privacy as a key competitive advantage. Speed and low fees no longer provide an advantage — almost all networks have them. Without privacy, a mass transition of finance to blockchain is impossible. It is the level of privacy that begins to really distinguish one blockchain from another.

2. The user lock-in effect. In public networks, it is easy to move to another ecosystem because all data is open. In private networks, any transition increases the risk of revealing one's identity and transaction history. Because of this, users are less likely to leave, and loyalty to the network becomes significantly higher.

3. Who will win the blockchain competition. Universal blockchains without unique properties are gradually losing their meaning. Private networks form stronger network effects that intensify over time. As a result, several private blockchains may capture a significant market share.

4. The future of messengers and communications. Encryption alone does not solve the problem of privacy. Centralized servers can be shut down or forced to disclose data. The solution is decentralized protocols without a single point of control, where the user owns the messages through keys, not through the application.

5. Privacy and security as infrastructure. Sensitive data can no longer be stored using the «trust the service» model. On-chain access rules and a secrets-as-a-service approach are needed, where privacy is built into the base layer of the system. Security must be defined by the protocol architecture: a transition from «code is law» to «spec is law,» where dangerous transactions are automatically blocked.

Source: A16zcrypto.com

SEC roundtable on privacy in the crypto industry

The SEC held a roundtable discussion on privacy issues in the crypto industry. Representatives from Zcash (ZEC), StarkWare (STRK), Aleo (ALEO), and other projects participated in the discussion.

The topic of privacy became the center of attention, as it allows users to confirm the legitimacy of their transactions without disclosing their entire financial history. Experts noted that privacy is becoming a key element of trust and competitive advantage for the crypto industry in 2026.

1. Blockchain transparency. Blockchain is more transparent than any traditional financial system — every transaction is recorded in a public ledger.

2. Risks of aggressive regulation. With excessive control, cryptocurrency can turn into a powerful financial surveillance system that threatens the freedom of market participants.

3. Privacy and legality of transactions. Cryptocurrency technologies make it possible to prove compliance with requirements without disclosing the full financial history. Users can confirm the legality of their actions without transferring personal data to intermediaries or the state.

4. The danger of complete transparency. If large players are unable to operate discreetly, there will be massive front-running — competitors will copy every transaction, which will harm the market.

5. A balance is needed. Privacy tools should protect the lawful activities of citizens from total surveillance, while providing the state with the means to combat real threats to national security. This is the way to protect freedoms and stimulate innovation.

Why financial privacy in crypto is not a threat, but a necessity

Commissioner SEC Esther Pierce consistently raises the issue of financial privacy in the crypto industry and criticizes the current model of total surveillance. Below are the key points of her position.

1. Crypto breaks the traditional model of surveillance. Transactions can take place without intermediaries, causing the state to lose centralized points of control and data collection.

2. What is permissible in finance is prohibited in life. People cannot be monitored without cause, but mass financial surveillance has become the norm, even though payments reveal as much about a person as their personal space.

3. The lack of privacy has become a cultural habit. The idea that monitoring payments is “natural” has become legally and socially entrenched, and most people accept it as a given.

4. Public blockchain makes privacy mandatory. Due to the complete transparency of the network, privacy ceases to be a risk and becomes a mechanism for protecting users.

5. The technologies already exist and are legitimate. Zero-knowledge proofs allow transactions to be confirmed without disclosing data, and mixers make it possible to make legitimate payments without total publicity.

6. Privacy is not equal to crime. The desire to keep one's financial life private is normal, not a sign of illegal activity.

7. Actions should be regulated, not code. Imposing intermediaries and putting pressure on software developers who do not control users' funds undermines the very logic of decentralization.

8. Targeted, not mass, control is needed. The focus should be on malicious actors, while protecting developers and law-abiding users.

9. Balance is more important than total surveillance. Modern technologies can enhance national security without turning the financial system into a tool for constant surveillance.

In conclusion

Anonymous cryptocurrencies continue to attract the attention of people who value privacy and security. Developers are constantly improving technologies, making transactions even more private.

At the same time, interaction with regulators and compliance with laws remain key factors for further growth and acceptance of these solutions. Only time will tell how things will actually turn out.

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