Maelstrom Steps Up Funding for Bitcoin Privacy Tools, Fully Exits Zcash

Arthur Hayes' family office, Maelstrom, is increasing its focus on Bitcoin privacy as part of a broader push to strengthen the network's technical foundations. In its first annual report, Maelstrom said that two of the four developers supported through its Bitcoin developer grant program now work full time on open-source privacy initiatives designed to make Bitcoin transactions harder to trace. The grant program has been running for nearly two years and was launched in October 2024. Grants are issued on 12-month contracts, with monthly stipends paid in bitcoin. Maelstrom also caps "stacked" grants, limiting support to a maximum of $400,000 per developer per year. The report names Benalleng and Macgyver as working on privacy efforts, while Rkrux and Stratospher contribute to Bitcoin Core. Maelstrom frames the program as a long-term investment in Bitcoin's scalability, robustness and privacy. The report highlights two broad approaches to mitigating transaction tracking. One method lets both the sender and recipient contribute inputs to the same transaction, altering the structure so it resembles a standard transfer less closely and weakening common on-chain surveillance techniques. A second approach allows recipients to accept funds without reusing or publicly revealing addresses, targeting privacy risks linked to Bitcoin address reuse. Cake Wallet founder Vikrant Sharma told AMBCrypto that integrating Bitcoin Silent Payments and Payjoin v2 helps close a longstanding privacy gap, adding that mobile users want to transact in bitcoin without exposing prior transaction history or balance information. Privacy work is also expanding beyond Bitcoin. The report notes that Helius is acquiring Light Protocol to develop a programmable, fully on-chain privacy layer for Solana, including encrypted balances and payment features for both retail and institutional users. The move underscores how privacy upgrades are shifting from wallet-level features toward deeper on-chain infrastructure. Alongside its Bitcoin privacy push, Hayes confirmed Maelstrom has sold its entire Zcash (ZEC) position, citing vulnerability risk tied to the Zcash Orchard pool. He said the issue could theoretically allow forged ZEC to be minted without detection. While he views the real-world likelihood as low, he said the risk cannot be fully ruled out from a cryptographic perspective, prompting a proactive exit. Hayes added that Maelstrom could repurchase ZEC if later evidence shows the assessment was incorrect. As of the time of the report, the total market capitalization of privacy coins was about $5.1 billion, with major projects including Zcash, Monero and Dash. Reported 24-hour trading volume was roughly $3.3 billion.