From JPMorgan to Ethereum: How on-chain "controlled privacy" is changing the rules of the blockchain and financial games?

The public transparency of Blockchain is its core advantage, yet it is also the resistance that financial giants are most concerned about. In recent years, from JPMorgan to Ethereum, an increasing number of TradFi and government units are actively exploring on-chain privacy technologies to address issues such as sensitive data exposure, compliance challenges, and business confidentiality leaks. From zk-SNARKs (ZKP) to account abstraction (AA) technology, it is quietly reshaping the financial industry's imagination of Blockchain.

On-chain transparency becomes an obstacle? The "privacy anxiety" of institutional finance.

Blockchain is known for its high transparency and traceability, but for financial institutions, such characteristics often contradict their confidentiality needs. Wall Street banks, asset management companies, and even government agencies are bound by strict compliance regulations and client privacy obligations.

If these institutions directly conduct fund operations on a public blockchain, their trading behaviors, strategies, and confidential information may be analyzed and tracked by external parties, resulting in competitive risks and potential security threats. As Ethereum founder Vitalik Buterin once pointed out:

The extreme transparency of public chains may expose individuals and institutions to surveillance and censorship, which poses a structural risk to a financial world that seeks to safeguard freedom and privacy.

It is not hard to imagine that for blockchain to be adopted by the mainstream, a proper privacy mechanism is indispensable.

Why can't we ignore "privacy rights"? Ethereum founder Vitalik Buterin provides an in-depth analysis of the future war on digital privacy.

Diverse technologies advancing together: Privacy solutions are blooming in full.

Although ZKP and AA have received widespread attention in recent years, they are not the only on-chain privacy technologies. The following solutions each have their own characteristics and have been tested or implemented by different institutions and platforms:

Zero-knowledge proofs (ZKP): allow users to prove the authenticity of certain information without revealing the data itself. For example, proving that a company's debt-to-asset ratio meets the standard without disclosing specific numbers. Both Ethereum and Solana have implemented the "confidential balance" feature.

Trusted Execution Environment ( TEE ): Allows nodes to process sensitive data in a closed hardware environment, preventing external access. Ethereum is also expected to create an RPC protection mechanism centered around TEE as a core privacy technology in the short term, emphasizing the isolation of on-chain and off-chain information.

Multi-Party Computation (MPC): Data is split and processed by multiple parties, with no single party able to access complete information. Fireblocks and LayerZero, among other cross-chain protocols, also utilize this technology for private signing and asset transfer.

Mixing Technology (Mixnets): By randomly mixing transaction orders and sources, it obscures the origin and destination of funds. Monero and Tornado Cash belong to this category but are of great concern to regulatory authorities.

Account Abstraction ( Account Abstraction, AA): The future Ethereum plan aims to support more dynamic control of accounts on L1, allowing users to customize privacy and verification conditions, such as disclosing specific information only to compliant parties.

These technologies represent innovations at different levels, including cryptography, hardware, protocol design, and account architecture, which can complement each other and be adjusted according to risks and needs.

(Solana launches the "Confidential Balance" feature, zk-SNARKs create a new standard for on-chain privacy)

Institutional Layout Examples: JPMorgan, DBS, and government agencies are the first to implement applications.

JPMorgan's private blockchain platform Kinexys, combining ZKP and permissioned blockchain technology, has partnered with banks such as DBS Bank and Standard Chartered to use in the Partior cross-border payment network. The system allows financial institutions to perform tokenized asset transfers and settlements while maintaining the confidentiality of transaction information.

( JPMorgan's blockchain platform Kinexys launches instant GBP exchange and remittance services )

On the other hand, the capital city of Argentina, Buenos Aires, also announced last year that it would integrate zk technology into its city digital service miBA, allowing users' proof documents to be government-certified without disclosing information unrelated to the current task.

The evolution of mainstream blockchains: from open transparency to the era of "controllable privacy"

Ethereum's L1 privacy blueprint shows that more "selective privacy" modules will be introduced in the future, allowing users to disclose or retain information based on their needs. Former Ethereum killer Solana also challenges the traditional blockchain logic of "everything on-chain, nowhere to hide" with privacy as its core design.

(Hiding wallet cash flow to achieve on-chain interaction anonymity: Vitalik presents the "Ethereum Minimalist L1 Privacy Roadmap" )

These developments are not only technological innovations but also a response to the diverse needs of regulatory bodies, the financial industry, and users. Future blockchain systems may be like VPNs, set to public by default, capable of encryption and authorization, achieving more mature data governance.

From Trust to Privacy: The Next Step in Blockchain Financial Infrastructure

In high-risk financial application scenarios such as payroll settlement, sovereign reserves, cross-border payment, and securities trading, privacy technology is no longer a bonus item but a basic threshold. The future trend is not that "a certain privacy technology dominates the market, but rather that suitable tools are formed based on different scenarios and jurisdictional environments."

From the cryptographic advantages of ZKP, to the hardware trust of TEE, and the secure collaboration of MPC along with the flexible design of account abstraction, these technologies will collectively drive on-chain privacy towards a new stage of practicality, compliance, and commercialization.

This article from JPMorgan to Ethereum: How on-chain 'controllable privacy' is changing the rules of the blockchain and financial game? Originally appeared in Chain News ABMedia.