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BitMEX co-founder Arthur Hayes urged Zcash holders to withdraw their tokens from centralized exchanges and move them into private wallets, warning Wednesday that exchange custody eliminates the privacy protections that define the cryptocurrency. The call comes as Zcash plunged 37% from weekend highs, dropping from $723 on Saturday to around $450 by Wednesday.
“If you hold $ZEC on a CEX, withdraw it to a self-custodial wallet and shield it,” Hayes wrote, referencing Zcash’s unique “shielding” function that allows for private, untraceable transactions.
His comments resonated widely among crypto investors and privacy advocates, many of whom view the move as a necessary defense against regulatory risks and potential exchange failures.
Zcash operates on a dual-address system: transparent addresses (t-addresses) that function like traditional wallets, and shielded addresses (z-addresses) that use zero-knowledge proofs (zk-SNARKs) to conceal transaction details such as sender, receiver, and amount.
Centralized exchanges, however, typically only support the transparent version of Zcash. As a result, Zcash holders who keep their funds on exchanges lose the privacy protection that defines the token.
Hayes’s advice to withdraw and “shield” tokens echoes a long-standing critique within the privacy community — that exchange custody undermines the purpose of privacy coins.
“When ZEC is held on a CEX, its privacy is compromised,” analysts noted in previous coverage by Cointelegraph. Additionally, tokens held on exchanges can be frozen under Know Your Customer (KYC) and anti-money laundering (AML) regulations, or delisted altogether — risks that privacy coins like Monero (XMR) have already faced in recent years.
By advocating self-custody, Hayes aligns with a broader trend emphasizing financial sovereignty in the wake of exchange insolvencies and regulatory crackdowns. Yet, the move also demands personal responsibility. Users must manage their private keys, maintain backups, and ensure their wallets support Zcash’s shielded transactions.
The renewed focus on Zcash holders comes as privacy-focused cryptocurrencies face intensified regulatory and market challenges. Despite recent declines, Zcash remains a key player in the sector, maintaining a $7.4 billion market capitalization, according to CoinMarketCap. The token still shows a 5% weekly gain, despite its sharp weekend correction.
Other privacy coins have seen mixed performances. Monero, another major privacy token, gained 7% in the past week and now has a market cap near $7 billion. Meanwhile, smaller tokens like Canton (CC), Dash (DASH), Decred (DCR), and ZKsync (ZK) have suffered losses ranging from 13% to 42% over the same period.
The divergence underscores growing uncertainty about the future of privacy-oriented assets, as regulators worldwide continue to tighten rules on anonymous transactions. Hayes’s remarks, therefore, serve not just as investment advice but as a political statement defending financial privacy.
For Zcash holders, Hayes’s warning highlights a fundamental trade-off between convenience and sovereignty. Keeping assets on centralized exchanges offers ease of trading and liquidity — but at the cost of exposure to surveillance, withdrawal limits, or delisting. Self-custody, by contrast, restores user control but increases the burden of security and technical knowledge.
As privacy coins remain under scrutiny, the call to “shield” assets may mark a turning point for how holders manage their digital wealth. Hayes’s statement reinforces the idea that in an era of tightening regulation, true privacy may only be achieved when users take control of their keys and operate outside custodial platforms.
The message to Zcash holders is clear: the technology promises privacy, but realizing it requires active participation.
