Privacy coins: scapegoats or escape goals

Privacy coins provide financial anonymity by concealing transaction details therefore shielding users from surveillance, cyber threats and financial discrimination. They enhance business confidentiality, ensure fungibility and support financial inclusion in restrictive regimes. However, regulatory scrutiny raises concerns about their future, as regards balancing privacy with compliance. And, despite their inherent promise of anonymity and decentralisation, cryptocurrencies have faced challenges in upholding true user privacy due to the increasing prevalence of know your customer (KYC) and anti-money laundering (AML) regulations. Whilst these regulations aim to curb illicit activities, they undermine the core principle of financial privacy that cryptocurrencies were originally designed to address. Nonetheless, this does not negate the critical need for the solutions that cryptocurrencies were intended to provide. The Web3 ecosystem has actively sought to overcome these privacy hurdles,…