The post Crypto’s Next Battle Is Privacy: Regulators Face Chicken-Egg Dilemma appeared on BitcoinEthereumNews.com.

Financial privacy is becoming the next structural battle in crypto, and neither governments nor the technology are fully prepared for mass digital surveillance or large-scale privacy. Institutional adoption of cryptocurrencies is accelerating, as more banks and payments companies test blockchain for settlements, but the technology itself exposes transaction data to the public. “What people are not comfortable with is having their transactions broadcast to the entire world,” Yaya Fanusie, head of global policy at Aleo Network and a former Central Intelligence Agency (CIA) economic and counterterrorism analyst, told Cointelegraph. “That is why, even though blockchain transparency is a feature and not a bug, it does not work for large-scale use without some form of privacy.” Blockchain payments are publicly accessible by design, but governments are beginning to engage seriously with privacy technology like zero-knowledge (ZK) proofs to reconcile transparency with existing financial privacy norms. The amount of Zcash held in shielded addresses has risen, reflecting growing use of privacy-preserving transactions. Source: ZecHub ZK privacy faces a chicken-and-egg problem For regulators and financial institutions, the privacy debate often revolves around how much confidentiality can be preserved from the public while still allowing compliance, supervision and enforcement. Fanusie said that this framing mirrors the existing financial system, where transactions are not anonymous but are also not exposed to constant online scrutiny. That becomes harder to maintain on public blockchains, where transparency is built into the architecture. Related: Crypto’s decentralization promise breaks at interoperability  Banks, payments companies and corporations may see efficiency and programmability benefits in blockchain systems, but few are willing to conduct routine financial activity on public ledgers where competitors, counterparties or adversaries can infer sensitive business information. “If all of those actions are public, it creates security risks and confidentiality issues. Institutions have proprietary and sensitive information that cannot be…

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Filed under: News - @ January 22, 2026 6:24 am