Anonymity of cryptocurrencies: myth or reality?

Nikita Veremeev

06.09.2025 | 6 min read

Updated: 06.09.2025

In 2024, more than 60% of major money laundering investigations in Europe and Asia were uncovered thanks to blockchain analytics and the de-anonymization of cryptocurrency transactions. It might seem that the technology, which promised absolute privacy, has become transparent for regulators and analytical companies. So why, despite technological innovations, does the anonymity of cryptocurrencies remain one of the most pressing issues for businesses, banks, and legal entities? Where is the line between the myth and reality of privacy? And most importantly, how can companies manage these risks without losing strategic advantages?

Today, companies face a double challenge: on one side, the business demands flexibility and privacy in international transactions, on the other: new rules in the EU, Asia, and the CIS tighten the requirements for KYC and AML, reducing the level of anonymity in cryptocurrency operations. In 2025, the question “cryptocurrency anonymity – myth or reality?” became not just a topic for discussion, but a critical factor in strategic planning.

The COREDO team regularly advises clients from the EU, Asia, and the CIS on company registration, obtaining financial licenses, implementing AML, and building compliance architecture for working with privacy coins. In this article, I will examine the current myths and realities of cryptocurrency anonymity, technological solutions, legal risks, and practical steps that will help your business not only comply with regulators’ requirements but also effectively use anonymous cryptocurrencies in corporate processes. Read the article to the end – you will receive not only answers to the most pressing questions but also tools for strategic development in the digital asset market.

Cryptocurrency Anonymity: Myth or Reality?

Illustration for the section 'Cryptocurrency Anonymity: Myth or Reality?' in the article 'Cryptocurrency Anonymity – Myth or Reality'
Cryptocurrency anonymity has long been discussed as a key feature, but how much of this claim is myth or reality? Understanding the differences between anonymity and pseudonymity in the blockchain, as well as the real capabilities for concealing or tracing transactions, will help to clarify this.

Anonymity and Pseudonymity in the Blockchain

Public blockchains like Bitcoin and Ethereum are often perceived as anonymous, but in practice, they only provide pseudonymity. Each network participant operates with addresses not directly linked to identity, yet all cryptocurrency transactions are permanently recorded in the public blockchain. This allows for analyzing funds’ movements, constructing connection graphs, and, with additional data, de-anonymizing participants.

Unlike public networks, private blockchains and privacy coins (such as Monero, Zcash) use advanced cryptographic methods, ring signatures, stealth addresses, zk-SNARKs, to conceal senders, recipients, and transaction amounts. Nonetheless, even these technologies do not guarantee absolute anonymity, particularly when interacting with centralized exchanges or off-ramp/on-ramp services.

Cryptocurrency Anonymity, Myth?

In practice, cryptocurrency anonymity often proves to be an illusion. Modern blockchain analysis tools like Chainalysis and Elliptic enable the de-anonymization of transactions, identifying connections between addresses, and tracking the movement of funds across various networks. In 2023–2025, many cases of recovering stolen funds, investigating cybercrimes, and sanction violations were accomplished thanks to these technologies.

The COREDO team has repeatedly encountered situations where clients, relying on transaction privacy, faced asset freezes or demands to disclose beneficiaries when attempting to withdraw funds via centralized exchanges. The legal consequences of anonymous transactions vary from fines to criminal liability depending on jurisdiction and transaction volume.

Blockchain Analysis for De-anonymizing Transactions

Blockchain analysis is based on correlating data from open ledgers with information obtained from centralized and decentralized exchanges, KYC providers, as well as through off-ramp/on-ramp operations. Solutions like Chainalysis, Elliptic build intricate transaction graphs, identify clusters of addresses, and correlate them with known services and users.

In COREDO’s practice, there have been cases where even using privacy coins, de-anonymization occurred at the exchange or withdrawal stage when user identification was required. This underscores that for businesses, the key is not only technology selection but also the proper integration of compliance processes and risk management.

Anonymous Cryptocurrencies: How They Work

Illustration for the section 'Anonymous Cryptocurrencies: How They Work' in the article 'Cryptocurrency Anonymity – Myth or Reality'
Anonymous cryptocurrencies are digital assets specifically designed to maximize user privacy and conceal transaction information. In this article, we’ll explore how anonymous cryptocurrencies work and examine key technologies used to ensure confidentiality using the examples of Monero and Zcash.

Comparison of Monero and Zcash Cryptocurrencies

Monero is built on the CryptoNote protocol and uses ring signatures, stealth addresses, and Ring Confidential Transactions (RingCT) to conceal senders, recipients, and transaction amounts. Bulletproofs help reduce the size of confidential transactions, enhancing network scalability. Zcash employs zk-SNARKs and shielded addresses, offering a choice between public and private transactions.

The table below provides a comparison of key privacy coins on the main criteria:

Cryptocurrency	Privacy Technology	Scalability	Regulatory Restrictions	Corporate Use
Monero	RingCT, Bulletproofs, stealth addresses	Medium	High in the EU	Yes, with strict AML
Zcash	zk-SNARKs, shielded addresses	Medium	Medium	Yes, with restrictions
Dash	CoinJoin, PrivateSend	High	Low	Partially
Bitcoin	None (pseudonymity)	High	Low	Yes

COREDO’s experience shows that when choosing privacy coins for corporate payments in 2025, it is critical to consider not only privacy technology but also regulatory restrictions in the target jurisdiction, as well as reporting and audit requirements.

Limitations of Private Blockchains

The scalability of anonymous blockchains remains a challenge for the corporate sector. Privacy technologies increase transaction size and network load, which can limit operation speed and cost for high volume payments. For example, Bulletproofs’ implementation in Monero has reduced the load but has not entirely solved the problem.

Integrating anonymous coins into business processes requires a well-thought-out architecture: integration with corporate wallets, ensuring IP address privacy (e.g., through Kovri), as well as compliance with internal and external compliance policies. At COREDO, we have developed solutions for clients where anonymous cryptocurrencies were used to protect trade secrets, with all operations undergoing internal audit and adhering to AML requirements.

Thus, in integrating anonymous cryptocurrencies, the central issue becomes not only the technological implementation but also compliance with regulatory requirements in various jurisdictions, which is further detailed in the following section.

Cryptocurrency Anonymity and Regulation in the EU, Asia, CIS

Illustration for the section 'Cryptocurrency Anonymity and Regulation in the EU, Asia, CIS' in the article 'Cryptocurrency Anonymity – Myth or Reality'
Cryptocurrency anonymity, one of the hottest and most discussed topics recently, especially against the backdrop of tightening regulation in the EU, Asia, and the CIS. New legislative initiatives in these regions aim to increase digital financial transparency and restrict the use of anonymous wallets and coins, directly changing the entire market landscape. Let’s consider how these processes are being implemented in Europe and Asia.

Cryptocurrency Regulation in Europe and Asia

In 2025, cryptocurrency regulation in the EU and Asia has tightened. The FATF Travel Rule requires data transfer about recipients and senders for transactions above $1,000. European regulators (ESMA, EBA) impose restrictions on the use of privacy coins, obligating exchanges and providers to implement identification and reporting procedures.

In COREDO’s practice, there have been cases where companies using anonymous altcoins faced service refusals from banks or account freezes due to non-compliance with new requirements. In Singapore and Dubai, on the contrary, the approach to regulation is more flexible but still requires strict KYC/AML compliance.

KYC and AML in Cryptocurrencies: Anonymity

Compulsory Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures have become standard for all licensed crypto companies in the EU, Asia, and the CIS. The introduction of AML procedures for crypto companies includes client identification, transaction monitoring, reporting, and interaction with auditors.

The implementation of these procedures reduces anonymity levels even when using privacy coins: as soon as coins hit a centralized exchange or are used for corporate payments, there arises the need to disclose beneficiary data and sources of funds. Solutions developed at COREDO allow automating client identification policies and ensure regulatory compliance without losing business process efficiency.

Legal Responsibility of Companies and Risks

Violating KYC/AML rules in cryptocurrencies results in serious sanctions: fines, asset freezes, license revocations, and in some cases – criminal liability.

COREDO’s practice cases show that even unintentional procedural violations can lead to lengthy disputes with regulators, especially in the EU and the UK.

To minimize compliance risks, it’s essential to conduct regular audits of cryptocurrency operations, document sources of funds, integrate blockchain analytics tools, and build transparent cryptocurrency reporting. COREDO practice confirms: only a comprehensive approach can avoid the legal consequences of anonymous transfers and maintain a reputation in the international market.

Privacy and Risk Management in Business

Illustration for the section 'Privacy and Risk Management in Business' in the article 'Cryptocurrency Anonymity – Myth or Reality'
Privacy and risk management in business come to the forefront in the face of rapid digitalization and increasing regulatory pressure. More and more companies are considering anonymous cryptocurrencies and wallets as tools for safeguarding the confidentiality of payments and minimizing operational risks. We will delve into existing solutions and what should be considered when choosing them.

Anonymous Cryptocurrencies and Wallets: How to Choose?

Selecting anonymous cryptocurrencies and wallets for corporate needs requires assessing not only technological characteristics but also compliance with the legislation of the target jurisdiction. Selection criteria include: level of privacy, support for multi-signatures, integration with corporate systems, auditability, and reporting export capability.

The COREDO team has implemented projects integrating Monero and Zcash into corporate finance, taking into account EU and Asian requirements. It’s important to consider the restrictions on privacy coins’ use in the EU, where some exchanges and banks refuse to work with such assets. Best practices include choosing wallets with transaction logging support and the capability to provide reporting to auditors.

AML and Compliance for Privacy Coins

Implementing AML procedures for crypto companies starts with developing internal client identification policies, configuring automated transaction monitoring systems, and integrating blockchain analytics tools (such as Chainalysis, Elliptic). At COREDO, we recommend regular staff training, procedure testing, and compliance architecture audits.

Risk control when working with anonymous coins includes evaluating sources of funds, monitoring large transfers, interacting with banks and auditors. COREDO practice has shown that process transparency and readiness for inspections significantly reduce the likelihood of sanctions and blockages.

Transparency and Anonymity in the Company

The balance between transparency and anonymity is achieved by implementing flexible operation legalization procedures, trade secret protection, and regulatory compliance. For this, tools of digital identity in blockchain, confidential reports for auditors, and internal data protection policies are used.

In one of COREDO’s cases, a client integrated anonymous coins for international transactions, documenting all operations and undergoing internal audit. This approach allowed maintaining competitive advantages while complying with compliance requirements and minimizing the company’s legal risks.

Conclusions and Recommendations for Business

Illustration for the section 'Conclusions and Recommendations for Business' in the article 'Cryptocurrency Anonymity – Myth or Reality'
Conclusions and recommendations for businesses provide a systematic approach to risk management and regulatory compliance. In this section, we have gathered the key steps and tools that will help a compliance officer build effective work within the company.

Checklist for the Compliance Officer

Evaluate the level of anonymity of the crypto assets used using blockchain analytics tools.
Check the compliance of corporate wallets with KYC/AML requirements in the target jurisdiction.
Implement automated monitoring and reporting systems for cryptocurrency operations.
Ensure employee training and regular compliance procedure audits.
Select a reliable partner for transaction support and auditing of privacy coins.

Let us move on to the key strategies for reducing legal and financial risks.

How to Reduce Legal and Financial Risks

Integrate anonymous cryptocurrencies into business processes only after analyzing regulatory requirements.
Prepare documentation for reporting on operations with privacy coins.
Engage with auditors and regulators in the early stages of implementing new solutions.
Use solutions to automate compliance and blockchain analytics.
Regularly update internal policies in line with changes in EU, Asia, and CIS legislation.

Cryptocurrency anonymity in 2025 is not absolute but a dynamic balance between technological capabilities, legal requirements, and business strategic goals. COREDO’s practice confirms: only a comprehensive approach, including privacy technologies, smart compliance, and a deep understanding of regulatory trends, enables companies to safely and effectively use anonymous cryptocurrencies in international operations.

If you wish to receive individual consultation, conduct a business process audit, or implement AML tools: the COREDO team is ready to be your reliable partner on this path.

Anonymity of cryptocurrencies myth or reality