The market for privacy coins is so hot in 2020 that it seems regulators fear it’s reaching its boiling point. Some are even looking to take action to tamp it down and are including privacy blockchain technology as part of their guidance on larger encryption-related issues.

Despite this potential regulatory overhang, Cypherpunk Capital, a firm publicly traded under the symbol “HODL” on the Canadian public markets, maintains that privacy is undervalued. Moe Adham, the firm’s chief investment officer, talked to CoinDesk on The Thesis about his fund’s privacy focus.

Adham’s investment thesis on increasing private transactions on blockchain networks comes from his search for cryptocurrency use cases. That’s especially important to him because he is also co-founder and CEO of YCombinator-backed bitcoin ATM provider Bitaccess.

Payments have not worked for crypto, in part, because it hasn’t delivered cost savings to users compared to credit cards, Adham pointed out. “We’ve really failed on the payments side,” he said. “So then, if you think that we’ve failed on payments, what is the value proposition of crypto?”

Two other justifications for crypto, scarcity and censorship resistance, are often touted by advocates.

According to Adham, scarcity alone might not be a compelling enough concept.

“I think that from our perspective, when you look at scarcity a lot of assets are scarce,” Adham said. “Apple has a stock that’s a scarce asset. But the value is from the underlying company, not just the scarcity.”

“I’m not necessarily convinced that scarcity alone is a long-term value proposition,” he added.

On the other hand, Adham calls censorship resistance and the ability for users to conduct transactions privately as perhaps cryptocurrency’s greatest innovation.

“The real fundamental change for crypto is the decentralized nature of it leads to censorship resistance,” he said. This led directly to Cypherpunk Holdings’ thesis that privacy is undervalued and has been mispriced by the market.

That may seem like a dangerous proposition in a market that is now being scrutinized by regulators, including a recent U.S. Department of Justice crypto enforcement framework warning market stakeholders. However, Adham points to a Europol report that showed in 2019 only 1.1% of total transactions were related to criminal activity.

It’s a delicate balance as there are a lot of unknowns in how regulators will enact privacy policies. Nevertheless, privacy is a bet where Cypherpunk Capital is clearly putting its chips – and Adham makes a convincing argument.

Listen in to this episode of Thesis to hear more about privacy, mixers and more with CoinDesk host Daniel Cawrey and guest Moe Adham from Cypherpunk Capital!