Dubai’s financial regulator has banned privacy-focused cryptocurrencies like Monero (XMR) and Zcash (ZEC) from use on regulated exchanges.
The new rules, issued by the Dubai Financial Services Authority (DFSA), took effect earlier today, Jan. 12, and apply across trading, promotion and fund activity in the Dubai International Financial Centre (DIFC).
“A person must not in or from the DIFC carry on a financial service relating to a privacy token or that involves the use of a privacy device,” the document reads. However, residents are still allowed to hold privacy coins in private wallets.
The DFSA said privacy tokens and related tools, such as mixers including Tornado Cash, pose anti-money-laundering (AML) and sanctions compliance risks.
The decision reignites a broader debate across the crypto industry over privacy versus regulation, as some policymakers push for stricter oversight while others argue that privacy tools are imperative to the original promise of decentralized finance (DeFi).
At a December roundtable hosted by the U.S. Securities and Exchange Commission’s Crypto Task Force, Commissioner Hester Peirce said financial surveillance rules need to be rethought as crypto adoption grows. Peirce further argued that privacy should not be treated as a signal of criminal activity.
The scrutiny of privacy tools has also intensified following the 2025 conviction of Roman Storm, a co-founder of Tornado Cash, in a U.S. case that raised concerns about money laundering and sanctions violations. The verdict further fueled debate over whether developers of non-custodial, open-source privacy tools can be held legally responsible for how their software is used.
The DFSA’s new rule came into effect as privacy tokens were among the day’s top gainers, with Monero up about 16% and ZEC rising more than 3% over 24 hours. ZEC was also the top-performing cryptocurrency of 2025, posting a rally of more than 800%, while XMR ranked as the second-best performing large-cap token, up about 127%.