Zcash rallies 15% as traders pull tokens to shielded pools

Zcash sees record amount of tokens out of circulation

Shielded supply refers to the number of tokens held in z-addresses. Unlike other wallet types on the blockchain, these addresses obscure both supply and transaction direction to ensure privacy. Shielded supply is often viewed as an indicator of long-term confidence in the network. 

Notably, most centralized exchanges do not support trading with z-addresses due to anti-money laundering and know your customer compliance. This means these tokens are effectively removed from circulating supply, creating scarcity in the open market, which can support higher prices.

The record shielded supply also points to increased adoption of Zcash’s privacy features. Like Monero, Zcash markets itself as a privacy token, enabling fully anonymous transactions on-chain. 

Still, this feature has attracted the attention of regulators, who are skeptical of these tokens due to AML and KYC concerns. Notably, in 2022, the U.S. Department of Homeland Security suggested that they are developing techniques to track transfers on these blockchains.