Monero is a privacy cryptocurrency akin to what ZCash (ZEC) offers, and was banned in virtually all countries and exchanges due to its high level of privacy, which may have allowed crypto criminals to thrive.
ZCash, which is quite analogous to Monero in operation, faces the same risk, especially after Dubai banned it, citing a violation of money laundering laws.
Why was Monero Banned?
Monero was banned because it honours user privacy at the highest level, which has attracted crypto criminals and other illicit organizations across countries.
Money Laundering
Monero could easily be used in money laundering, where its RingCT signature mechanism virtually made it impossible to trace the money trail of funds transferred on it.
Crypto Hacks
Funds from several cryptocurrency hacks were successfully laundered via Monero because the criminals found it impossible for law enforcement, and even the toughest crypto forensic analysts, to trace the funds to their destination.
In April 2025, more than $330 million of stolen Bitcoins were laundered by converting them to XMR.
Complete Untraceability
Monero offers complete untraceability via its RingCT signatures. It uses obscured receiver and sender details combined with one-time receiving addresses to make funds untraceable. Once a deposit is made in a Monero address, the public key of that address changes to ensure that the receiver and sender remain hidden.
Analogous to Crypto Mixers
Before banning Monero, several exchanges and countries imposed effective bans on crypto mixers like Tornado Cash, with a few governments going so far as to arrest the founders and co-founders of these organizations.
What Makes ZCash Different?
Optional Privacy
Privacy is ZCash is optional, which means users can turn off privacy for their needs such as business transactions, maintaining a proof of payments, etc. If ZCash gets a risk of ban in more places, it might disable privacy in those areas. Although it is difficult to ascertain whether the community will follow up on it, but the idea remains open.
Zero Knowledge
ZCash relies on Zero Knowledge solutions such as rollups and SNARKs to maintain its privacy. These solutions are already in widespread usage in the Ethereum ecosystem such as in Arbitrum, Optimism, Polygon, Linea, and over 50 other blockchains.
If they are able to function with the same technology and without a ban, ZCash won’t see much of a difference in its underlying technology. All it would need to do is to align its market positioning.
Technology Not Violating Existing Laws
There are no laws against scaling via Layer-2 chains. Since ZCash uses the same to enable privacy, it would not require much changes to comply with laws if KYC becomes the norm.
Possible Hard Fork
ZCash is based on Bitcoin, and in the event of a widespread restriction, it could trigger a hard fork, disabling privacy and making its chain more like the norm in the blockchain industry.
Will the Dubai Ban be a Norm or an Exception?
Understanding the Ban
In January 2025, the Virtual Assets Regulatory Authority (VARA), which is responsible for the Dubai Emirate’s crypto regulations, banned privacy coins as they were a threat to the emirate’s financial law enforcement.
However, the ban applies only to companies, not to individuals.
Norm or Exception
The ban is likely to become the norm because taxpayers in several countries have been evading taxes using these privacy coins. Further, there is an increased risk of money laundering for illegal purposes, including terror finance and narcotics.
Conclusion
ZCash might not face the same fate as Monero because it relies on technologies most chains use; however, it might need to make minor adjustments to mitigate the risk posed by regulators.
