Jeff Cangialosi

After a long wait, stablecoins are having their moment. Traditional financial institutions and payment processors are engaging with the space and figuring out what stablecoins mean for their businesses. One issue that remains a hurdle for some large players getting into the space is privacy. While some would call the open and transparent nature of the ledger a feature of blockchain, others see it as a downside.

The scary point for big institutions is that once wallet addresses are doxed (i.e., I know this wallet belongs to Company A), then I can track all the flows in and out. For example, once I knew the wallet that receives payments for Nike, I would theoretically have real-time data on Nike’s revenue. That’s cool in theory but a no-go for most Fortune 500 companies and their banking partners.

As a result, privacy solutions are required for this next phase of adoption. This does not mean we should completely throw away the transparency capabilities of blockchains, but we likely need a mechanism that enables only certain parties to view and utilize transaction level data. For example, you could imagine a world where the sender and the merchant are the two parties who ‘own’ the transaction level data and then they can share that data if desired with other apps or products they use. That’s a concept for a whole other post, but for now, I wanted to share some high-level thoughts on privacy when it comes to blockchain transactions and what I’m seeing today from my vantage point at Loop Crypto.

For companies that are enabling crypto payments for their businesses, there are really four different categories of approaches to privacy. In practice right now, approaches 1 and 2 are what I see most often.

1) Wallet rotation – There are varying degrees of sophistication here, but generally, companies spin up a new wallet address per customer that is paying them.

• This could be as simple as spinning up a Metamask to accept a $100k payment and then immediately moving those funds into a broader treasury account. Or companies have more sophisticated setups with Fireblocks sub-accounts.
• Before you had solid invoicing and billing solutions for crypto payments (like Loop 😀) , companies also took this approach so that they could track which customers were paying them. For example, companies would spin up a wallet with the address 0x123 for a given customer. Then any time funds hit wallet 0x123, they would know it was a receivable from Customer A.

2) Custodial accounts – This solves the transaction privacy problem since all funds hit a wallet address at an exchange like Coinbase. You then rely on the custodial provider to credit individual accounts.

• When I was out at ETHDenver in early 2025, one of the guys from Google Cloud was talking about how they created a whole custodial setup with Coinbase to address the privacy question and that they’ve now done somewhere in the range of $100M on chain in revenue payments.

3) Privacy dedicated chains and rollups – There is a range of dedicated L1s and L2 rollups (typically zero-knowledge based) that enable some form of private transactions.

• Canton – They seem to have the most institutional buzz and participants in the network, but the network seems a bit more focused on tokenizing RWAs.
• Aztec – Rollup built on top of Ethereum, which has its benefits. Polygon also has its own zk-privacy chain.

4) Wallet originated privacy – There are a few projects building in this space. I think its promising, but scaling the compliance aspects here are key as governments are going to be resistant to ‘mixers’ (i.e., smart contracts that jumble together a bunch of transactions to obscure who sent funds where).

• One example of this is a project called RAILGUN. I met them out at ETHDenver two years back. I’m fuzzy on all the exact details, but I believe they spin up a smart wallet for users that then wraps each send within a unique wallet address. It’s more for anonymizing sender details (like token, amount, etc.).
  • To my understanding, you could add a compliance layer in front of being able to generate the wallet to avoid KYC/AML concerns you would have with a mixer like Tornado Cash.
• There’s another project called Messier that I’ve briefly heard of. It seems like they’re also trying to build transaction privacy that will be chain agnostic.

In my mind, it’s not clear that one approach to privacy will win. I think we’ll see shades of all four. While there is currently a lot of hype around Canton Network and the impressive list of partners they have assembled, distribution is hard. Chains like Ethereum and Solana already have hundreds of millions of wallet addresses on those chains. Maybe that will not matter if a payment application is built on top of Canton and obscures the wallet creation layer. It’s hard to say. With that said, all the companies that are really handling crypto payments today seem to be doing so on the most popular chains where there is existing adoption and liquidity.

Keep an eye on this topic. This is one that is going to be critical in the coming months and years for adoption.