## Privacy Assets Rise Against the Trend: Where Does Free Capital Go When Regulations Tighten?

If there is one extraordinary phenomenon in the 2025 crypto market, it is the astonishing performance of privacy coins. While most sectors struggle to support growth, privacy-oriented assets led by Zcash (ZEC) and Monero (XMR) have experienced a reversal. According to the latest data, ZEC has surged over 698% in the past year, far outperforming other sectors, while Bitcoin's performance has been relatively mild, even declining slightly by 1.05%.

What exactly is happening behind the scenes? Why is capital suddenly flowing into this asset class that regulators have repeatedly targeted?

## The Battle Between Control and Freedom

Ethereum co-founder Vitalik Buterin recently issued a sharp warning on social media. He expressed strong skepticism about the European Union's Digital Services Act (DSA). In Buterin's view, this legal framework attempts to completely shut the door on certain "undesirable" ideas and products, while ignoring a core issue: the problem is not the existence of these ideas, but how algorithms infinitely amplify them.

Buterin's perspective touches on a deeper contradiction—when systems begin indiscriminately suppress certain tools or assets, it instead intensifies people's desire for privacy and autonomy.

## Europe's Tightening Regulations

2025 marks a turning point for the European crypto market. The EU is no longer in the rule-making discussion phase but is actively pushing for actual enforcement. MiCA has officially come into effect, imposing strict requirements on crypto companies for licensing, disclosure, and token screening. Stablecoins face systemic elimination pressures, and anti-money laundering departments have explicitly declared cryptocurrencies as a priority regulatory area. New rules on cybersecurity and operational risks have also been introduced.

Under this regulatory storm, trading activity has unexpectedly shifted toward privacy assets. Market data shows that the trading volume and market cap rankings of privacy coins are steadily rising, as capital searches for alternatives that can protect holders' autonomy.

## From the US to Japan, and then to Europe

This is not the first time such a cycle has occurred. US sanctions on Tornado Cash once sparked a global debate about privacy and financial control. Subsequently, mainstream exchanges began delisting privacy coins like Monero, with compliance costs skyrocketing. Japan had already banned privacy coin trading years ago, and other countries have followed with restrictive policies.

Paradoxically, whenever access is restricted, privacy coins tend to become the focus. Even the recent Tornado Cash court ruling has reignited public attention on privacy assets.

## A Pattern Worth Reflecting On

When we overlay Vitalik's warning with current market data, a clear picture emerges: the stronger the system's control, the greater the appeal of privacy and autonomous assets. This is not coincidence but a natural law.

For investors focused on Ethereum and its ecosystem, although Ethereum's performance in CAD terms is influenced by the broader market, the tension between privacy, freedom, and regulation is shaping the new landscape of the 2025 crypto market. The rise of privacy coins, to some extent, is the market's response in price language to Europe's new regulatory framework.

**Key Observations**
- Privacy coins are becoming the strongest-performing asset class in 2025
- The implementation of EU's MiCA and DSA drives capital toward privacy-first solutions
- This trend reflects a deeper issue: when free space is compressed, the market will find new outlets