In brief
- A new report from ChangeNOW and CoinRabbit argues that crypto privacy and compliance are not a zero-sum trade-off, with enforcement leverage sitting at fiat off-ramps.
- It documents protective uses including civilian access under sanctions, corporate confidentiality and defense against physical coercion.
- The report also cites TRM Labs putting 2025 illicit inflows at $158 billion, with 84% of fraud proceeds moving over stablecoin rails.
Crypto privacy tools serve “essential protective functions” that restore a measure of financial privacy that has always existed in TradFi, according to a new report from non-custodial crypto platform ChangeNOW and digital asset management platform CoinRabbit.
Building on data from sources including TRM Labs, Chainalysis, RAND Corporation and the authors’ own internal research, the report highlights the risks of data exposure on conventional public blockchains.
They include financial access under economic sanctions and authoritarian governance, corporate sovereignty as firms transition to blockchain infrastructure, and individual security in the face of scam attempts and “wrench attacks.”
What privacy protects
Sanctions fall hardest on the people least able to influence the conduct being punished, the report argues. When Iran was cut off from SWIFT, ordinary citizens lost the ability to receive foreign payments, buy imported goods and collect family remittances, while the political class kept alternative rails. U.S. Treasury Secretary Scott Bessent has said Operation Economic Fury seized about $1 billion in Iranian crypto, including a single $344 million USDT freeze on Tron.
Corporate treasuries face a different exposure. Anyone holding a company's wallet address can reconstruct its vendor relationships, payment frequencies, estimated payroll and supply chain dependencies—data that would be confidential at any bank. Statista research cited in the paper puts the share of board members worried about internal data becoming public at 36%, with the average breach costing $4.44 million.
High-net-worth crypto holders face a personal threat to their safety from conventional blockchain infrastructure in the face of “wrench attacks.” Walter Barrett, Chief Strategy & Growth Officer at CoinRabbit, noted that, “Public blockchain transparency lets anyone audit your net worth in real time, turning private wealth into public information.”
That carries risks, with CertiK counting 52 verified wrench attacks in the first half of 2026, exposing $124.1 million, nearly 12 times the H1 2025 figure. France accounted for 33 of them, after breaches at France Travail and ANTS let attackers match home addresses to suspected crypto holdings. French prosecutors have since charged 88 people, more than 10 of them minors.
Blockchain transparency also allows for scammers to identify high-value targets, with internal CoinRabbit research finding that roughly half of surveyed high-net-worth holders had faced a targeted social engineering attempt within three years, and that 30% use data-broker removal services to break the link between their identity and their on-chain activity.
Where leverage sits
Crypto privacy remains a double-edged sword, the report stresses. The authors cite TRM Labs putting total illicit crypto inflows at $158 billion for 2025, up 145%, with Chinese-language escrow and laundering networks accounting for more than $100 billion. Pig-butchering fraud caused $75 billion in losses between 2020 and 2024, and 84% of verified fraud and scam inflows now move over stablecoin rails.
Nevertheless the authors argue, the decisive enforcement vulnerability "lies at the fiat off-ramps" where crypto becomes spendable currency, "not within the upstream transactional privacy infrastructure."
Privacy is not what defeats investigators, according to AQ Forensics founder Albert Quehenberger. It "may increase the complexity of an investigation" but "rarely determines whether a criminal can ultimately be identified," he said, with attribution coming from on-chain analysis, KYC records, exchange cooperation and stablecoin issuer intervention rather than "relying on blockchain transparency alone."
The report’s authors pointed to their own solutions, citing ChangeNOW’s private transfer routing and CoinRabbit's custodial model as models of best-practice privacy preserving crypto architecture.
“The privacy debate starts from the wrong assumption that ordinary users must prove they have nothing to hide by exposing everything,” said Pauline Shangett, Chief Strategy Officer at ChangeNOW, calling for the crypto industry to “build systems where access is justified, targeted, and lawful, not universal by default.”
Download the “Financial Privacy in the Digital Age” report here
Brought to you by ChangeNOW
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