The privacy coin sector has expanded nearly fivefold over the past year to roughly $30 billion, according to a Sept. 22 research note from 21Shares, as Zcash has led gains and financial institutions continue testing confidential blockchain infrastructure.

21Shares said the sector had risen from $6.2 billion a year earlier and was trading 216% above its October 2025 peak based on the firm’s dataset. The asset manager placed Zcash at around $20 billion in market capitalization when it prepared the research and described privacy as an increasingly important requirement for institutional blockchain use.

“Privacy is not a feature digital assets can bolt on later,” 21Shares research strategist Matt Mena wrote, arguing that public transaction histories can expose corporate balances, counterparties and trading strategies.

Independent market data taken later on Sept. 22 showed the rally had moved further. CoinGecko showed the privacy-coin category at roughly $36.9 billion, led by Zcash at close to $25 billion and Monero at approximately $11.2 billion.

The totals are not directly interchangeable because 21Shares and CoinGecko use their own category definitions and market snapshots. CoinGecko separately values its full privacy category, which includes privacy infrastructure and other privacy-related networks, at more than $60 billion.

Privacy coins gain as Zcash approaches $25 billion

Zcash has accounted for most of the recent rise among dedicated privacy coins. CoinGecko’s Sept. 22 reading put $ZEC near $1,473, with a market capitalization close to $25 billion. The token had gained roughly 22% over seven days and 75% during the previous 30 days at that snapshot.

Those figures have moved well beyond the approximately $20 billion valuation used in the 21Shares report. The firm’s research compared the current market value with Zcash’s roughly $4 billion peak during 2021 and said the network had risen around 400% above that earlier level.

The price advance has come alongside a rise in coins held inside Zcash’s shielded pools. ZecStats reported that 4.91 million $ZEC, or 29% of issued supply, was shielded as of 05:34 UTC on Sept. 22. At the prevailing market price, those coins were worth approximately $7.19 billion.

The 29% reading measures the share of issued $ZEC held in shielded pools, not the share of transactions using privacy. ZecStats counts Sprout, Sapling, Orchard and the newer Ironwood pool, which activated on July 28 after developers replaced the affected Orchard design.

Zcash activated Ironwood through the NU6.3 upgrade after developers discovered a soundness vulnerability in Orchard earlier this year. Project Tachyon later published machine-checked proofs covering Ironwood’s balance integrity before activation.

Zcash introduced Ironwood after the Orchard vulnerability raised supply-integrity concerns, while users subsequently migrated much of the shielded balance into the replacement pool.

Zcash ETF adds a regulated U.S. access route

U.S. investment access changed during the same period. Grayscale’s Zcash ETF began trading on NYSE Arca under the ZCSH ticker on Aug. 25, becoming the first exchange-traded product offering spot exposure to $ZEC.

Grayscale said ZCSH was created through the conversion of its existing Zcash Trust. The product gives brokerage-account holders price exposure to $ZEC without requiring them to manage private keys.

Grayscale launched the first Zcash ETF with direct $ZEC exposure after the registration became effective in August.

An SEC filing later showed more than $70 million of cumulative inflows during ZCSH’s first two weeks, separate from a $100 million investment by a Digital Currency Group affiliate. Grayscale warned in its filings that $ZEC remains highly volatile and investors can lose their entire investment.

Another regulatory event preceded the fund’s launch. Grayscale’s filings state that the SEC terminated its investigation or enforcement action involving the Zcash Foundation in January 2026. The filing does not establish that ending the investigation caused or guaranteed the later approval of ZCSH.

Ethereum and Solana put privacy on development roadmaps

21Shares argues that demand for confidentiality is extending beyond tokens built specifically around privacy. Ethereum and Solana are developing systems intended to make selected transaction or application data less exposed while preserving verification.

Ethereum’s official roadmap describes three main privacy tracks: private reads, private writes and private proving. Private reads focus on stopping wallets and infrastructure providers from leaking query information, while private writes cover transaction activity and metadata. Private proving uses cryptography to demonstrate facts without revealing the underlying data.

The Ethereum Foundation has created an Institutional Privacy Task Force alongside its Privacy and Scaling Explorations research group. Its institutional portal describes work on zero-knowledge proofs, fully homomorphic encryption, trusted execution environments and privacy-focused Layer 2 networks for regulated financial applications.

Not every proposed privacy change is guaranteed to reach Ethereum’s mainnet. The Foundation’s roadmap says timelines can change during technical review and the network’s consensus process.

Ethereum has placed privacy among the priorities for its Hegotá development cycle, with Frame Transactions and other proposals being assessed alongside censorship-resistance and post-quantum work.

Solana already provides Confidential Balances through its Token-2022 framework. Solana’s documentation states that the feature can encrypt balances and transfer amounts while leaving token accounts, account owners and participation publicly visible.

Issuers may configure an optional auditor key that decrypts confidential transfer amounts. Solana says the auditor key does not reveal the full account balance and cannot authorize transfers.

Canton uses controlled disclosure for institutional transactions

Institutional privacy is taking a different form on Canton Network, which was built around controlled information sharing between participants.

Digital Asset told the SEC in an Aug. 17 comment letter that Canton had more than 1,000 participants and supported more than $8 trillion in tokenized securities activity each month. The company named Broadridge, Goldman Sachs, HSBC and Société Générale among institutions using the network.

The $8 trillion figure describes monthly financial activity reported by Digital Asset and should not be interpreted as $8 trillion of assets permanently held on a public blockchain.

DTCC has moved part of its tokenization work into production testing on Canton. On July 15, the market infrastructure company reported successful production transactions involving tokenized DTC-held securities across Canton and DTCC’s private Besu network.

More than 30 firms participated in workflows covering U.S. Treasury repo transactions, securities lending, collateral pledges, equities and delivery-versus-payment trades. DTCC plans to launch its Tokenization Service in October 2026.

Canton has attracted banks developing tokenized deposits and institutional settlement systems, including projects involving JPMorgan and other large financial institutions.

Privacy growth still faces regulatory limits

21Shares used crime data to challenge the view that privacy assets account for most illicit cryptocurrency use. Chainalysis estimated that illicit addresses received at least $154 billion in cryptocurrency during 2025, while attributed illicit transactions remained below 1% of overall crypto transaction volume.

Stablecoins represented 84% of identified illicit crypto volume in the firm’s 2026 report. Chainalysis said this partly follows their extensive legitimate use, high liquidity, low volatility and cross-border transfer capabilities. The data does not measure whether a specific privacy coin is free from criminal use.

Regulatory treatment still varies by jurisdiction. The European Union’s Anti-Money Laundering Regulation prohibits crypto-asset service providers from maintaining anonymous crypto accounts or accounts that allow increased transaction obfuscation through anonymity-enhancing coins.

The provision applies from July 10, 2027, when the EU’s new anti-money laundering regulation takes effect for covered financial and crypto service providers.