Privacy: Who See Your Money?

Part three of a five-part series on crypto privacy: privacy wallets, privacy tokens, why they matter for payments, and what Nervos Network could do in this space. Disclosure: I hold CKB, the native token of Nervos Network. This series presents information, not recommendations. Nothing in it is investment or legal advice, and I am not a lawyer. Rules differ by country, so check your own jurisdiction. Previously: Part 2 covered the three ways to make a crypto payment private (crowds, ciphers and channels) through Monero, Zcash, CoinJoin, Railgun, Aztec and payment channels. Two things happened in crypto privacy over the past few years, and at first glance they contradict each other. First, privacy got punished. Governments sanctioned a privacy tool's code, prosecuted the developers of a privacy wallet, and wrote rules pushing privacy coins off regulated exchanges. Second, privacy went mainstream. Circle, the company behind the USDC stablecoin, built privacy into its own blockchain. Solana switched on confidential balances. The Ethereum Foundation released a privacy toolkit for wallets. Some of the largest banks and asset managers in the world are testing it. These aren't contradictions. They are the same fight, and it has a clear dividing line. It isn't privacy vs. no privacy . It's privacy an auditor can open vs. privacy nobody can open. Understanding that line is the key to understanding where crypto payments are heading. The crackdown: a timeline Figure A — The fight over code swung back and forth. The rules for companies only tightened. Date Event August 2022 The U.S. Treasury sanctions Tornado Cash , an Ethereum privacy tool, after North Korea's Lazarus Group used it to launder stolen funds. It's the first time software code itself was placed on a sanctions list. April 2024 The founders of Samourai Wallet , a Bitcoin privacy wallet, are arrested and charged with money laundering and running an unlicensed money-transmitting business. May 31, 2024 The European…