Institutions Are Buying Into The Privacy Coin Hype – But Will It Last?

What Happened

Additionally, Feldman pointed out that investment vehicles like the Grayscale Zcash Trust—which allows investors indirect exposure to ZEC—have seen steady growth in assets under management (AUM).

Market Context

While the majority of the crypto market continues to face declines, privacy coins have demonstrated a rather surprising surge.

Grayscale Research’s October 2025 report notes: “Although crypto valuations were broadly lower in October, a major exception was the Zcash network’s ZEC token, which gained 248% during the month and reached a market cap of about $6.5 billion.”

Litecoin (LTC), Monero (XMR), and Dash (DASH) have also shown increased adoption, as demonstrated by CoinMarketCap’s list of top-performing privacy tokens.

Howard Wu, CEO of Provable and Creator of Aleo—an ecosystem of experts leveraging privacy solutions for blockchain—told Cryptonews that privacy is becoming a heightened priority. Wu noted that this is due to the market’s focus on financial infrastructure for real-world use cases.

“Projects building privacy-preserving technology that can work across chains and integrate with existing systems are what’s actually capturing institutional/enterprise attention, not necessarily holding privacy-focused tokens,” Wendt said.

Why It Matters

Although it may come as a surprise that privacy coins are gaining popularity, industry experts believe that such a phenomenon was bound to happen.

With the enterprise blockchain sector expected to reach $287 billion by 2032, institutions have turned to privacy coins to achieve solutions that offer some form of confidentiality. For example, Grayscale’s report explains that Zcash is a decentralized digital currency like Bitcoin (BTC), but incorporates optional privacy features through “shielded” accounts and transactions.

Details

A Closer Look at Privacy Coins

“The needs of enterprises and institutions differ from that of early crypto adopters,” Wu said.

Shielded transactions on Zcash hide the sender, receiver, and transaction amount using zero-knowledge proofs. The Zcash network uses cryptography to let users choose whether a transaction is public or shielded.

According to Grayscale’s findings, demand for these features has grown. “The share of ZEC supply held in shielded addresses has increased to about 30% from an average of about 10% in 2024,” the report states.

How Institutions Leverage Privacy Coins

While traders are known for using Zcash, institutions are starting to leverage privacy coins for a number of use cases.

Carter Feldman, Founder and CEO of Psy Protocol—a Layer-1 blockchain focused on privacy—told Cryptonews that institutional use of Zcash primarily revolves around two areas.

“First, for selective privacy in transactions, where institutions can leverage Zcash’s shielded pools to conduct confidential transfers, while retaining the ability to disclose details for audits or compliance via view keys.”

“Such products indicate that institutions are actively diversifying their portfolios to include privacy-enhancing assets,” he said.

The Importance of Privacy

Charlie Lee, creator of Litecoin, elaborated that privacy is key for many businesses transacting with LTC. “I don’t consider LTC to be a privacy coin since we are not focused specifically on privacy. However, having privacy features available for users is a key feature of payments, which is what LTC was designed for,” he stated.

Will Wendt, head of ecosystem at Oasis Protocol, further told Cryptonews that enterprises showing interest in privacy coins are not only focused on the tokens themselves, but rather on the outcome.

Institutions have also begun experimenting more with ZKP architecture to explore private settlement layers and confidential reporting mechanisms.

Gracy Chen, CEO of crypto exchange Bitget, told Cryptonews that the same privacy principles are being integrated into newer Web3 networks that focus on compliance-friendly privacy, where data can be selectively disclosed when needed.

“It’s not about hiding transactions anymore, but about protecting sensitive business data in a way that’s still auditable and regulatorily sound,” Chen said.

Privacy Versus Anonymity