Paper 2026/872

Privacy Coins Under Viewing Key Compromise

Abstract

Anonymity guarantees of privacy-oriented cryptocurrencies are garnering negative attention from lawmakers who view them as antinomic to accountability. Having recognized their potential for innovation, however, regulators may not want to outright ban privacy coins but instead seek a middle ground where financial oversight is effective, and still some privacy is maintained. Mature designs, such as Zcash, Monero, or Firo, facilitate this through so-called viewing keys that can be disclosed to third parties for the purpose of supervision. This paper studies which privacy guarantees continue to hold once they have been. In doing so, it fills the gap in provable anonymity guarantees for Zcash and Firo under incoming viewing key disclosure, while, at the same time, exposing problems with Monero. Finally, the paper shows that malicious parties may happily surrender all viewing keys in each of Zcash, Monero, and Firo and still find very efficient ways of evading financial monitoring.