Having worked in the financial industry for years, I have seen many projects struggle to balance privacy and compliance—some end up on the fringes of regulation to protect privacy; others, in an effort to please regulators, simply abandon privacy altogether, making them no different from traditional financial systems. It wasn't until I learned about the DUSK project that I realized there is a third possibility: integrating privacy and auditability from the ground up, allowing Layer 1 blockchains to become truly suitable infrastructure for regulated financial markets.

Today, I want to analyze this project, which was born in 2018, from three perspectives—why traditional financial systems need it, how it achieves this technically, and what real-world implementation looks like.

**1. The Deadlock Between Privacy and Regulation**

Just look at how traditional finance operates. Banks tightly guard your transaction information but still need to cooperate with anti-money laundering and counter-terrorism financing checks; institutional investors conducting large trades don’t want details leaked prematurely to affect the market, yet they must also clarify the compliance of their transactions to regulators. These two needs seem contradictory, but some entities manage to satisfy both simultaneously.

When blockchain technology entered the scene, this balance was shattered. Bitcoin offers anonymity, but regulators have no way to control it, and it’s often seen as an outsider to the financial system; platforms like Ethereum, with their transparent transaction records, are fully transparent—leaving no privacy at all.