Vitalik Buterin Demonstrates New Privacy Pools Feature on Ethereum

A new privacy tool named Privacy Pools has launched on the Ethereum blockchain, aimed at enabling users to conduct transactions anonymously while demonstrating that their funds are not associated with illicit activities.

Developed by the team at 0xbow.io, the platform allows semi-permissionless access, with initial deposits capped at one Ether.

Ethereum co-founder Vitalik Buterin was among the first to engage with the platform, reportedly making a deposit shortly after its launch on March 31. The initiative employs a feature known as “Association Sets,” which aggregates transactions into anonymous pools. This mechanism includes screening processes to filter out transactions linked to illegal actors, such as hackers and scammers.

0xbow.io stated that these Association Sets are dynamic, allowing the removal of deposits identified as illicit without affecting other contributions. Users whose deposits are disqualified can utilize a "ragequit" function to retrieve their funds.

Despite the potential for enhanced privacy, the tool enters a landscape marked by increasing scrutiny from regulators. Privacy protocols have been under fire in recent years due to their exploitation by criminals for money laundering.

For instance, Tornado Cash was sanctioned by the U.S. Treasury in 2022 after being linked to approximately $7 billion in laundering activities.

The launch of Privacy Pools comes at a time when illicit crypto transfers reached over $41 billion in 2024, according to Chainalysis, representing 0.14% of the total on-chain volume for that year. Although this figure indicates an 11% decline from 2023, Chainalysis has projected that the total could rise to $51 billion as more criminal addresses are identified.

It also received backing from a white paper co-authored by Buterin and academics from the University of Basel, which has seen significant engagement in the research community.