Monero holds niche as EU KYC/AML pressure builds

Why Monero is carving a unique Web3 privacy niche now

According to TRM Labs, Monero (XMR) continues to carve a unique niche in 2025 within the Web3 privacy space, driven by robust privacy mechanisms that differentiate it from other cryptoassets. That positioning matters as Web3 projects balance confidentiality with transparency and compliance expectations.

As reported by Yahoo Finance, market commentary links strengthening demand for privacy tools to tightening KYC/AML regulations, including requirements for some exchanges to report wallet ownership data as early as 2026. In this framing, privacy has shifted from a peripheral add-on to a core utility narrative across digital assets.

As reported by Decrypt, privacy coins such as Monero have at times acted as “pockets of strength” during volatile or bearish market phases. This flight-to-privacy pattern helps explain Monero’s stickiness even as policy risk and compliance scrutiny increase.

What makes Monero privacy-by-default distinct in Web3

As reported by CoinDesk Research, Monero’s privacy-by-default means all transactions are shielded by design, unlike optional-privacy models such as Zcash where users must opt into protected pools. Default privacy reduces metadata leakage from mixed public/private address sets and simplifies user behavior by making privacy the standard.

Monero’s stack combines RingCT to conceal amounts, ring signatures to blend spenders among decoys, and stealth addresses to generate one-time destinations that break address linkability. Because these protections are always on, fungibility benefits from uniform confidentiality rather than case-by-case shielding.

That philosophy is echoed within the privacy developer community. “Privacy isn’t something that should remain niche. Privacy and anonymity are foundational rights,” said Justin Ehrenhofer, VP of Operations at Cake Wallet.

Immediate impacts: regulation, delistings, and liquidity concentration risks

As reported by Cointelegraph, the European Union is moving to restrict privacy coins and anonymous accounts on regulated crypto services starting in 2027. If enacted as described, access to Monero on EU-licensed venues would likely narrow even as broader questions about lawful use and compliance remain jurisdiction-specific.

As reported by Digital Finance News, major exchanges have periodically delisted privacy coins on compliance grounds, a trend that continues to affect Monero’s onshore availability. Delistings tend to push trading activity toward smaller or offshore venues, with knock-on effects for market depth.

Citing market-structure concerns, Ryan McMillin, CIO at Merkle Tree Capital, has warned that when liquidity concentrates on less regulated venues, price discovery can distort and volatility can rise. Such concentration risk can complicate institutional best-execution and due-diligence processes, even if end-user demand for privacy persists.

At the time of this writing, based on data from Kraken and KuCoin, XMR/USD was trading near $341. While levels move intraday, this figure is provided solely for contextual background and should not be interpreted as an indicator or recommendation.

Explainer: RingCT, ring signatures, and stealth addresses

Ring signatures are a cryptographic technique that lets a signer prove they are part of a group without revealing which member actually signed. In Monero, a spender’s input is mixed with decoys, so observers cannot tell which input corresponds to the real transaction.

Ring Confidential Transactions (RingCT) hide the amount being transferred by using cryptographic commitments and range proofs. Validators can confirm that inputs equal outputs without seeing the values, preserving supply integrity while keeping amounts private.

Stealth addresses are one-time addresses derived from a recipient’s public keys for each payment, preventing linkage between incoming transactions and any publicly known address. Combined, ring signatures, RingCT, and stealth addresses deliver end-to-end, privacy-by-default behavior across Monero’s transaction graph.