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Zcash News Today: a16z Calls on U.S. to Adopt Privacy-Centric Technology to Stay Ahead in Digital Finance

Zcash News Today: a16z Calls on U.S. to Adopt Privacy-Centric Technology to Stay Ahead in Digital Finance

Bitget-RWA2025/11/12 06:20
By:Bitget-RWA

- a16z urges U.S. Treasury to prioritize privacy-preserving identity tech in GENIUS Act implementation, advocating zero-knowledge proofs (ZKPs) and MPC for AML compliance. - Privacy-focused cryptos like Zcash (ZEC) and Midnight gain traction, with Zcash surging 1,172% YTD and GDPR-compliant Midnight attracting institutional interest. - Microsoft's "Whisper Leak" AI vulnerability highlights risks to privacy, prompting calls for obfuscation techniques to protect data in blockchain and AI ecosystems. - Regula

Andreessen Horowitz (a16z) is urging the U.S. Treasury to make privacy-centric digital identity solutions a top priority as it implements the GENIUS Act, a significant stablecoin regulation passed in July 2025. In its submission, the venture capital firm highlights the importance of cryptographic technologies such as zero-knowledge proofs (ZKPs) and multi-party computation (MPC) to improve anti-money laundering (AML) measures while protecting user privacy

. This push is in line with the wider industry toward privacy-oriented blockchain developments, as demonstrated by the swift rise of assets like (ZEC) and the introduction of privacy-driven protocols such as Midnight, a Cardano-based sidechain .

The GENIUS Act requires stablecoin providers to hold full reserves in U.S. dollars or other liquid assets, submit to yearly audits, and give stablecoin holders priority in bankruptcy cases. While

and have called on regulators to clarify certain aspects of the law—especially those concerning limits on interest payments—both companies agree that privacy-enhancing technologies are essential for the U.S. to remain at the forefront of digital finance , . a16z’s recommendation to use ZKPs in identity verification would let organizations validate transactions without revealing personal data, addressing a challenge regulators face as concerns about data leaks and surveillance grow .

As regulatory frameworks evolve, privacy-oriented cryptocurrencies are seeing increased adoption. Zcash, which leverages zero-knowledge proofs for confidential transactions, soared 1,172% in 2025, surpassing

(XLM) to become the 14th largest cryptocurrency by market cap . At the same time, Midnight—a privacy-focused sidechain from Input Output Global (IOG)—brands itself as a “fourth-generation” blockchain, merging regulatory compliance with advanced privacy. Its Kachina Virtual Machine (KVM) enables GDPR-compliant, auditable transactions, drawing institutional attention .

However, privacy continues to face new risks. Microsoft recently revealed the “Whisper Leak” side-channel attack, which can analyze encrypted AI chat data to deduce sensitive topics with over 98% accuracy

. This vulnerability underscores the necessity for strong obfuscation methods, like those used by OpenAI and Microsoft Azure, to conceal transaction patterns in both AI and blockchain networks.

The tension between privacy and regulatory compliance is growing as authorities consider the impact of decentralized identity solutions. a16z supports a collaborative approach between public and private sectors, proposing pilot programs that use ZKPs and MPC to simplify compliance and encourage innovation

. Likewise, co-founder Vitalik Buterin has suggested combining proofs with other cryptographic methods, such as fully homomorphic encryption (FHE), to bolster privacy in use cases from voting to cross-chain data queries .

As the Treasury prepares to finalize GENIUS Act regulations by the end of 2025, industry participants are closely monitoring whether the U.S. will reinforce its leadership in privacy-first digital finance or lose ground to regions with less unified regulatory standards.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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