Stablecoins’ privacy: how zero-knowledge proofs are unlocking enterprise adoption

If there’s one thing that has bugged crypto enthusiasts about the current stablecoin narrative is that while these assets have been touted to revolutionize the payments market — boasting over $94 billion in transaction volume between January 2023 and February 2025 — and bring crypto to the mainstream, most Fortune 500 boardrooms have seemingly passed on the technology. And it’s not because CFOs don’t understand what’s going on, or because compliance teams have taken an overly cautious stance. The problem is much more simple and fundamental than that, i.e., companies don’t like every single transaction being broadcast on a public blockchain visible to everyone, forever. In real-world terms, that means one’s morning coffee purchase could expose their entire financial history to anyone who bothered enough to look it up. For individuals, such a proposition is concerning, but for businesses, it stands to be catastrophic. The privacy problems become even more apparent when considering use cases like payroll management, where every employee’s salary becomes public information, from the summer intern to the CEO. Or consider healthcare providers who need to make payments related to patient care (suddenly they’re looking at potential HIPAA violations). Privacy that works One breakthrough being recognized in relation to many of the aforementioned bottlenecks is zero-knowledge proofs (ZKPs). Sparing a terminological deep dive, the basic concept underlying the technology is elegant, i.e., one can prove something is true without revealing why it’s true. In practical terms, this means an individual can verify that a payment is legitimate without exposing who’s paying whom or how much. Similarly, they can confirm regulatory compliance without sharing sensitive data or validate their identities without revealing any personal information. That said, most privacy coins offer an all-or-nothing approach such that transactions are either completely visible or completely hidden. That binary choice doesn’t work for businesses that need nuanced privacy controls, as they might want to keep vendor negotiations private while maintaining public compliance records, or encrypt individual salary data while publishing aggregated workforce statistics for SEC reporting. This is where projects like Aleo are fast gaining traction, because instead of forcing a choice between transparency and privacy, they’ve built programmable privacy directly into the blockchain architecture. Developers can specify exactly what information stays private and what becomes public, application by application, transaction by transaction. Through its innovative AleoBFT consensus mechanism , the platform can deliver striking numbers (such as 10,000+ transactions per second with sub-second finality). That’s not just competitive with traditional payment rails — it’s often faster. Moreover, the ecosystem that’s emerged around Aleo tells a story better than any whitepaper, as over 350 projects are actively building privacy-preserving applications atop the network. One standout project in this regard is zPass, which enables identity verification without data exposure so that instead of having to share one’s identity documents (to prove that they’re over 21), a person can cryptographically prove their age without revealing their birth date, name, or address. For businesses undergoing KYC compliance, this significantly reduces their data liability while ensuring regulatory compliance. A compliance revolution is brewing Since the beginning, traditional compliance has been based on data collection and sharing, wherein banks collect customer information, share it with regulators, and store it in systems that become attractive targets for hackers. The entire framework assumes that compliance requires data transparency between trusted parties. Zero-knowledge compliance flips this model so that instead of sharing data to prove compliance, one generates cryptographic proofs that verify regulatory requirements are met. A smart contract can automatically confirm that a transaction counterparty isn’t on a sanctions list without accessing the underlying KYC database. Cross-border payments can prove jurisdiction compliance without revealing transaction details. As a result, the stablecoin market is approaching a tipping point with payment giants like Visa and PayPal launching their own stablecoins , and traditional banks are exploring central bank digital currencies. The organizations that solve the privacy puzzle first stand to capture the enterprise market. And, based on what Aleo has been doing, such an evolution seems to be underway already. The post Stablecoins’ privacy: how zero-knowledge proofs are unlocking enterprise adoption appeared first on Invezz

Source: Invezz