Privacy Pools, a New Semi-Permissionless Privacy Tool, Has Launched on Ethereum

A new semi-permissionless privacy tool, Privacy Pools, has launched on Ethereum, allowing users to transact privately while proving their funds aren't linked to illicit activities.

A new semi-permissionless privacy tool called Privacy Pools has launched on Ethereum, allowing users to transact privately while proving their funds aren’t linked to illicit activities.

The privacy protocol, launched by Ethereum builders 0xbow.io on March 31, earned support from the likes of Ethereum co-founder Vitalik Buterin, who backed the privacy project and made one of the first deposits on the platform.

0xbow.io said that it implements “Association Sets” to batch transactions into the anonymous Privacy Pools and that a screening test is being used to ensure that those transactions aren’t linked to illicit actors, such as hackers, phishers and scammers.

“The Association Sets are ‘dynamic’— meaning that if an institution is implicated in illicit activity, we can remove its transactions from the set without disrupting any other depositors.”

If a deposit is disqualified, the user can click the “ragequit” function to return the funds to their original deposit address.

The innovation is part of 0xbow.io’s vision to “Make Privacy Normal Again” while also attempting to achieve regulatory compliance.

Privacy protocols have received considerable backlash from regulators in recent years due to their increasing use by illicit actors to launder funds.

One of those privacy tools, Tornado Cash, was sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC) between August 2022 and March 2025 after it was linked to around $7 billion laundered by the North Korean state-backed Lazarus Group.

Tornado Cash has since been removed from OFAC’s blacklist after a US appeals court said the sanctions were unlawful in January 2025.

0xbow.io noted that initial deposits are limited to 1 Ether (ETH) but that the limit would be raised once the privacy protocol is more battle-tested.

Privacy Pools inspired by Buterin and others

Over 21 ETH has already been transferred into Privacy Pools from 69 deposits, including at least one from Buterin, 0xbow.io noted.

Source: Vitalik Buterin

In addition to Buterin, 0xbow.io said it also received investment support from Number Group, BanklessVC, Public Works and several angel investors.

Related: Privacy isn’t a luxury in crypto, it’s a necessity — Midnight CEO

0xbow.io also praised Buterin, Chainalysis Chief Scientist Jacob Illum, and two academics at the University of Basel in Switzerland for crafting a September 2023 white paper outlining how Privacy Pools could be built.

0xbow.io strategic adviser Ameen Soleimani also contributed to the paper, which has seen over 12,000 downloads and has been cited in nine other papers.

The Privacy Pool code also passed a successful audit from Audit Wizard, a smart contract auditing firm co-founded by former Apple engineer Joe van Loon.

More than $41 billion worth of illicit transfers were made in 2024, which made up 0.14% of total onchain volume for the year, according to the Chainalysis 2025 Crypto Crime report published on Jan. 15.

While it marked around an 11% fall from 2023, Chainalysis said that figure could climb to around $51 billion as more criminal-tied addresses are found.