Privacy Pools on Ethereum

A new semi-permissionless privacy tool called Privacy Pools has gone live on Ethereum, offering users a way to obscure transaction details while proving their funds haven’t been linked to illicit activity. Launched by Ethereum builders 0xbow.io on March 31, the tool uses “Association Sets” to batch transactions into private pools, while screening out potentially criminal addresses.

Vitalik Buterin Shows Support

Among the earliest supporters is none other than Ethereum co-founder Vitalik Buterin, who tested Privacy Pools by making a deposit shortly after launch. The team behind 0xbow.io believes the project is a crucial step forward—balancing financial privacy with the regulatory demands for anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance.

Association Sets and Screening

Privacy Pools rely on “Association Sets” that group deposits together, providing anonymity via batch processing. In addition, the protocol runs screening tests to ensure that none of the pooled addresses are associated with hackers, scammers, or other illicit actors. The dynamic nature of these sets enables deposits later found illicit to be removed, with minimal disruption to other participants.

Ragequit Feature: Should an address be disqualified, users can trigger a “ragequit,” returning funds back to their original deposit addresses—helpful if a legitimate address accidentally becomes entangled with suspicious transactions.

Combatting Privacy Protocol Concerns

Regulators have come down hard on privacy solutions in recent years, citing the use of anonymizing tools by money launderers. The best-known example is Tornado Cash, which faced sanctions from the U.S. Office of Foreign Assets Control (OFAC) between August 2022 and March 2025. The tool was linked to about $7 billion in alleged money laundering orchestrated by North Korea’s Lazarus Group. Eventually, a U.S. appeals court declared those sanctions unlawful in January 2025, removing Tornado Cash from OFAC’s blacklist.

Privacy Pools aim to mitigate similar regulatory disputes by striking a middle ground, allowing anonymity only if depositors prove their funds haven’t touched blacklisted addresses. This approach potentially aligns better with compliance standards.

Limited Launch, Future Expansion

Right now, Privacy Pools only allow deposits of 1 ETH at a time, a limit set to ensure a controlled rollout. The team at 0xbow.io plans to raise this cap once the protocol has gone through more extensive testing and demonstrated that its approach to privacy and regulatory obligations stands up under real-world scrutiny.

Technical and Community Backing

• Investors: Number Group, BanklessVC, Public Works, and multiple angel investors have supported 0xbow.io financially.
• Audit: Privacy Pools code passed a successful audit by Audit Wizard, a firm co-founded by former Apple engineer Joe van Loon.
• Research Paper: Ameen Soleimani, a strategic adviser to 0xbow.io, co-authored a paper on privacy protocols—now downloaded over 12,000 times and cited in nine other papers.

The Privacy Pools Launch represents a fresh solution for anonymizing Ethereum transactions in a way that also meets compliance head-on. By blending dynamic pool membership with AML-like screening, the project aims to “Make Privacy Normal Again,” while keeping authorities at bay. With an early demo from Vitalik Buterin and real-world usage on the Ethereum network, Privacy Pools may pave the way for broader adoption of privacy solutions that still foster trust and legitimacy.