From JPMorgan to Ethereum: How On-Chain “Controlled Privacy” is Transforming Blockchain and Financial Game Rules?

05/12/2025

Blockchain’s Public Transparency: A Core Advantage and a Source of Concern for Financial Giants

The public transparency of blockchain is its core advantage, yet it is also the greatest concern for financial giants. In recent years, from JPMorgan to Ethereum, an increasing number of traditional financial institutions and government entities are actively exploring on-chain privacy technologies to address issues such as sensitive data exposure, compliance challenges, and business confidentiality leaks. From Zero-Knowledge Proofs (ZKP) to Account Abstraction (AA) technologies, these advancements are quietly reshaping the financial industry’s perception of blockchain.

Transparency on the Chain as a Barrier? The “Privacy Anxiety” of Institutional Finance

Blockchain is renowned for its high transparency and traceability, but for financial institutions, such characteristics often conflict with their confidentiality needs. Wall Street banks, asset management firms, and even governmental entities are bound by strict compliance regulations and customer privacy obligations.

If these institutions conduct financial operations directly on a public blockchain, their transaction behaviors, strategies, and confidential information could be analyzed and tracked by outside entities, leading to competitive risks and potential security threats. As Ethereum founder Vitalik Buterin once pointed out:

“The extreme transparency of public chains can expose individuals and institutions to surveillance and scrutiny, which poses a structural risk for a financial world that seeks to safeguard freedom and privacy.”

It is not hard to imagine that for blockchain to be widely adopted, a robust privacy mechanism is essential.

Why Must We Not Ignore “Privacy Rights”? A Deep Dive by Ethereum Founder Vitalik Buterin into the Future War of Digital Privacy

Multiple Technologies Advancing: Privacy Solutions are Flourishing

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

Zero-Knowledge Proofs (ZKP): This allows users to prove the authenticity of certain information without revealing the data itself. For example, proving that a company’s debt-to-equity ratio meets standards without disclosing specific figures. Both Ethereum and Solana have implemented a “confidential balance” feature.
Trusted Execution Environment (TEE): This allows nodes to process sensitive data within closed hardware, preventing external access. Ethereum plans to create an RPC protection mechanism centered on TEE as a core privacy technology, emphasizing the segregation of on-chain and off-chain information.
Multi-Party Computation (MPC): Data is split and processed collectively by multiple parties, with no single party able to access the complete information. Cross-chain protocols like Fireblocks and LayerZero also utilize this technology for private signing and asset transfer.
Mixing Techniques (Mixnets): By randomly mixing transaction orders and sources, they obscure the source and destination of funds. Monero and Tornado Cash are examples of this, but they are under significant scrutiny from regulatory bodies.
Account Abstraction (AA): Ethereum plans to support more dynamic control of accounts in L1 in the future, 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, and can complement each other and be adjusted based on risks and needs.

Institutional Layout Examples: JPMorgan, DBS, and Government Units Leading the Way

JPMorgan’s private chain platform, Kinexys, combines ZKP and permissioned chain technology and has collaborated with DBS Bank and Standard Chartered Bank to use it in the Partior cross-border payment network. This system allows financial institutions to transfer and settle tokenized assets while maintaining the confidentiality of transaction information.

On the other hand, the city of Buenos Aires, Argentina, 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 irrelevant information.

The Evolution of Mainstream Blockchain: From Open Transparency to the Era of “Controllable Privacy”

Ethereum’s L1 privacy blueprint indicates that more “selective privacy” modules will be introduced in the future, allowing users to disclose or retain information according to their needs. Former Ethereum killer Solana is also designed with privacy at its core, challenging the traditional blockchain logic of “everything on-chain, nowhere to hide.”

These developments are not only technological innovations but also responses to the diverse needs of regulatory bodies, the financial industry, and users. The future blockchain systems may resemble VPNs, defaulting to public but capable of encryption and authorization, achieving more mature data governance.

From Trust to Confidentiality: The Next Step for Blockchain Financial Infrastructure

In high-risk financial application scenarios such as payroll settlement, sovereign reserves, cross-border payments, and securities trading, privacy technology is no longer just an added bonus but a basic threshold. The future trend is not that “a particular privacy technology dominates the market,” but rather forming suitable tools according to different scenarios and jurisdictions. From the cryptographic advantages of ZKP to the hardware trust of TEE, and then to the secure collaboration of MPC and the flexible design of account abstraction, these technologies will collectively drive on-chain privacy toward a new stage of practicality, compliance, and commercialization.

Risk Warning

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