Zcash (ZEC): The cryptocurrency with an invisibility cloak that some people adore and others want to ban
What is it?
Zcash is a cryptocurrency launched in 2016. It was created by a team of cryptographers led by Zooko Wilcox, based on Bitcoin's code. So they have a lot in common: a limit of 21 million coins, “halvings” (the reward for miners decreases over time), and mining.
The key difference is privacy.
With Bitcoin, everything is transparent. Anyone can open a blockchain explorer and see who sent what to whom. There are no names, but there are addresses—and if your address has ever been linked to you (through an exchange, purchase, or donation), your entire history becomes public. Imagine a bank statement anyone can read.
Zcash gives you a choice: pay openly, like with Bitcoin, or “in the shadows,” where an outside observer can’t see the sender, recipient, or amount.
Two types of transactions
Transparent: like Bitcoin, everything is visible to everyone.
Shielded: the data is hidden, but the network still verifies that everything is valid.
How is that even possible?
Here’s the most interesting part. How can the network verify a transaction if it can’t see anything?
A tool with a mysterious name helps: zk-SNARK, or “zero-knowledge proof.”
An analogy: “Where’s Waldo?”
You’ve found Waldo in a huge picture and want to prove it to a friend without showing them where he is. You take a large sheet of cardboard with a small hole in it and place it over the picture so that only Waldo is visible through the hole. Your friend can tell that you found him, but doesn’t know where in the picture he is.
That’s what a zero-knowledge proof is: you prove that you know something or that something is true without revealing the data itself.
What exactly Zcash proves
When you send a shielded transaction, your wallet creates a mathematical “proof” that tells the network, roughly, the following:
✅ “I really do have these coins.”
✅ “I’m not spending them a second time” (protection against double spending).
✅ “The amount that went in is the amount that came out; no money appeared out of thin air.”
But who I am, who I’m paying, and how much I’m paying remain hidden. The network verifies the proof in a fraction of a second and says, “The math checks out. Accepted.” It’s like a security guard letting you in with a ticket without knowing your name.
What it looks like on the blockchain
Instead of a clear record saying “Vasya → Petya: 5 ZEC,” the blockchain contains an encrypted set of data plus a proof. An outsider can only see that something happened and that it was valid.
What if I need to show it to the tax authorities?
Privacy in Zcash doesn’t mean “absolute secrecy from everyone.” The owner has a viewing key. It lets them selectively show their transactions to, for example, an auditor, accountant, or tax authority, without revealing everything to the rest of the world. You decide who sees what.
Remember this detail; you’ll need it later.
Why regulators are nervous 😬
The idea of “money that no one can see” sounds like a dream to some and a nightmare to others.
What they don’t like
The entire modern financial system is built on a simple rule: a bank must know who its customer is and where their money comes from. This is called KYC (know your customer) and AML (anti-money laundering). If a bank can’t see where the money is going, it can’t help catch a fraudster, thief, or someone evading sanctions.
Now imagine a coin where the blockchain itself hides the sender, recipient, and amount. To a regulator, it’s a safe they can’t look inside, even with a court order. They don’t necessarily think there’s something bad inside. They’re simply uncomfortable that it’s impossible to check.
What’s already happening
Europe. The EU’s new Anti-Money Laundering Regulation (AMLR) takes effect on July 10, 2027, and prohibits regulated companies, such as exchanges and custodians, from supporting privacy coins like Monero and Zcash. An important detail: MiCA itself doesn’t directly ban privacy coins; the pressure comes specifically from the AMLR. People often confuse the two.
Dubai. According to Cointelegraph, a ban on privacy coins was introduced there, showing that regulators are putting transparency ahead of anonymity.
Exchanges. Many take the “better safe than sorry” approach. When exchanges scale back support for privacy assets, they remove the entire category, so from the outside it looks like a coordinated campaign, even though there’s no single directive. For example, Kraken delisted Monero back in 2024.
Note that what’s being banned isn’t owning the coins, but using them through licensed platforms. Wallets and person-to-person transfers aren’t affected for now.
Why Zcash has a better chance than Monero
This is where that viewing key comes in handy. Monero’s privacy is always on for everyone. Zcash’s is optional, and analysts note that selective disclosure of data for audits gives Zcash a regulatory advantage.
The argument goes: “We’re not hiding money from the law; we’re hiding it from random passersby. We’ll show it to those who are entitled to see it.” That said, no exchange has relisted ZEC to meet MiCA requirements yet, even though a technical path exists.
What privacy advocates say
Privacy isn’t the same as crime. Cash is anonymous too, and no one considers everyone who pays with bills a money launderer.
A transparent blockchain means surveillance. An employer, neighbor, or mugger could see how much money you have and where you spend it.
Safety. For journalists, activists, and people living under authoritarian governments, privacy can be a matter of life and death.
Criminals will find a way regardless. They use cash, shell companies, and ordinary banks. But a ban affects ordinary users.
Who’s right?
The debate is about how much privacy society is willing to tolerate for the sake of security, and how much transparency it’s willing to tolerate for the sake of freedom. There’s no clear answer, which is why Zcash has found itself in the line of fire.
Pros and cons
Pros:
genuine financial privacy (your salary or purchases aren’t visible to the whole world);
flexibility: you can pay openly or privately;
strong cryptography that scientists have been scrutinizing for years.
Cons and caveats:
Shielded transactions used to be heavy and slow. Things are noticeably better now, but they’re still more complex than transparent transactions.
Not all wallets and exchanges support shielded addresses.
If you transfer ZEC from the shielded pool to the transparent pool and back, you can lose some privacy. You’re completely “in the shadows” only when the entire transaction chain is shielded.
Regulatory pressure (see above): exchange restrictions could make buying and selling more difficult.
The bottom line in one sentence
Zcash is like Bitcoin, but it can do something Bitcoin can’t: hide who paid whom and how much. The network still verifies every payment, while regulators are still deciding whether they like this kind of invisibility cloak.
This is neither investment nor legal advice; it’s an explanation of how the technology works. Rules change quickly, so check your country’s laws and your exchange’s terms before using it.
