The crypto industry is currently facing an interesting state of division. On one side, regulatory authorities are tightening review standards, and traditional DeFi projects often get stuck at compliance hurdles; on the other side, institutional investors are increasingly interested in on-chain assets, but they don’t want their data fully exposed. Amid this opposition, some blockchain projects are exploring a new approach: can they protect business privacy while also ensuring compliance?

The core technological weapon of these projects is zero-knowledge proofs. It sounds complicated, but it’s simply about—proving that I know something without revealing the actual information. Applied to blockchain, this means transactions can be verified without exposing their specific details. But here’s the problem: fully anonymous encrypted assets have long caught the attention of regulators, and anti-money laundering compliance pressure is intense. So, the key is to find that balance point.

From a product perspective, many projects are now building such ecosystems. For example, some projects have launched EVM-compatible execution layers, allowing developers to continue writing smart contracts in Solidity without learning a new language, while integrating native privacy features at the core. It sounds simple, but behind this is a modular architecture design—separating the privacy layer from the execution layer to ensure security isn’t compromised.

More practically, there are improvements at the transaction layer. Test versions now support confidential transactions within EVM environments, and users’ balance data can remain private. There’s a clever design here—although privacy data is encrypted, it remains auditable by regulators. In other words, when law enforcement needs to investigate, authorized personnel can still see transaction records, but ordinary users cannot see each other’s data. This solution provides financial institutions with a tool to protect business-sensitive information while also meeting AML requirements.

Data from actual network testing is also promising. In the testnet environment, block times are stable around 2 seconds, which is a moderate speed among public chains—neither too fast nor too slow. The chain ID is set to 745, and token precision follows the standard 18 decimal places—these are routine configurations.

Honestly, the real challenge for these projects isn’t technical but market perception and application scenarios. Regulation and privacy are inherently contradictory, and finding a compromise is already difficult; the key is whether financial institutions are willing to adopt it. If this logic can truly be implemented, there could be significant potential in the emerging field of institutional on-chain asset management.