Privacy coins have always been in an awkward position in this sector.

On one side are supporters from the tech community and libertarians who insist that complete anonymity and untraceability are the true essence of decentralized blockchain. On the other side are regulators and major trading platforms who view privacy coins as hotbeds for money laundering. A leading exchange has delisted XMR, and a compliant platform avoids ZEC at all costs. The EU is even more aggressive, directly legislating to ban anonymous coin trading by 2027.

What should privacy coin projects do caught in the middle? Some cling to their technical ideals, while others try to find compromises. But Dusk Foundation’s idea is a bit different—they aim to create compliant privacy.

This sounds contradictory. Privacy and compliance are inherently opposed—how can both be satisfied at the same time? But Dusk is determined to prove that this path is possible—and perhaps the only sustainable way forward.

First, let’s look at the current status of two pioneering privacy coins.

Monero has a market cap of $4.75 billion, utilizing ring signatures and stealth addresses, with all transactions defaulting to anonymous. No one can see who sent what to whom. This design is very pure, technically mature, and has operated smoothly for nearly 10 years without major issues. But what’s the cost? Accessibility. XMR is virtually absent from mainstream exchanges worldwide, and can only be traded on small exchanges or P2P markets—luck depending. Liquidity is so poor that large transactions are rare.

Zcash took a different route. They use zk-SNARKs zero-knowledge proof technology, giving users a choice—they can use transparent addresses or shielded addresses. It sounds flexible and theoretically balances privacy and compliance. But what’s the reality? Over 95% of ZEC transactions are transparent. Because most trading counterparts don’t trust shielded transactions, and exchanges tend to favor transparent ones.

Both veterans face the same problem: pure privacy is too extreme and isolates the project, while optional privacy is too mild and underused.

Dusk aims for a third way—that is, to guarantee privacy technically, but make compromises socially and regulatorily. Not confrontation, but negotiation. It sounds pragmatic, but how feasible is it? The difficulty might be greater than both extremes.

Because you need to satisfy two groups simultaneously: tech enthusiasts demanding integrity and uncompromising ideals, and regulators requiring traceability and compliant transparency. Finding a balance in the middle is no easy feat.

That’s also why many people, when looking at Dusk, can’t immediately judge whether this approach will succeed or not. The market needs time to validate, and users need time to understand.