Key takeaways
- Privacy isn't just about who holds the view key. It depends on compensating controls across the broader ecosystem that balance confidentiality with investigation and enforcement.
- Confidential assets introduce new responsibilities for analytics providers, shifting their role from monitoring public ledgers to supporting selective disclosure, governance, and risk-based investigations.
- Success won't be measured simply by transaction volume. It will come when exchanges, stablecoin issuers, regulators, and financial institutions trust confidential assets enough to integrate them into everyday financial workflows.
Confidentiality is essential for bringing enterprise finance onchain. But it isn't enough. Institutions also need the governance, analytics, and operational controls that make confidential finance work in practice.
With confidential transfers now available in public beta on Sui, we spoke with Liam Glennon, Head of North America Financial Institutions and Privacy at TRM Labs, about what it takes to make confidential finance practical for regulated institutions. TRM is a design partner for confidential transfers.
From transparency to trust
Abhinav Garg, Group Product Manager, Platform at Mysten Labs: Public blockchains provide transparency, but financial systems rely on confidentiality around balances and transaction amounts. What problem are Confidential Transfers trying to solve?
Liam Glennon: One of the ways I like to frame this is the evolution from HTTP to HTTPS.
When the "S" was added, people felt comfortable putting their credit card information on the internet. I think blockchains are going through a very similar evolution.
When blockchains first emerged, transparency was one of the main value propositions. Bitcoin was born out of the financial crisis, and people wanted to see what was happening without having to trust a third party. Now that we've proven we can conduct transactions in a trustless, transparent environment, some transactions actually need to be private.
I think about that in two buckets.
The first is individual users. Someone might want to make a donation without everyone knowing where they sent their money. There's also the safety aspect. We've seen kidnappings and wrench attacks because wallet balances are public. People can identify high-value wallets, and that creates real risks.
The second is institutions. Regulations are creating more clarity. Firms are now looking at the technology and asking whether it meets their business requirements. Are they comfortable putting their entire payroll onchain if competitors can see compensation data? Probably not. Trading firms don't want competitors seeing their books.
Engineering trust into privacy
Abhinav: One thing we've discussed throughout the development of confidential transfers is the importance of compensating controls. How do you think about those?
Liam: One thing we really appreciated working through with your team was the conversation around compensating controls.
Having a view key or audit key is one part of the solution because it gives authorized parties a way to decrypt information when necessary. But then you have to think about the compensating controls around the broader ecosystem.
Take bridges as an example. If assets move into a shielded pool, are there velocity limits or volume constraints?
Speed is one of blockchain's greatest strengths. Sui is one of the fastest blockchains out there. But sometimes there needs to be what I call strategic friction. If something goes wrong, investigators need enough time to decrypt information, trace the flow of funds, and, if necessary, freeze a stablecoin before those assets disappear.
Privacy isn't just about who has access to the view key or audit key. It's also about the compensating controls around the broader ecosystem.
Operationalizing confidential assets
Abhinav: Let's talk about what this means in practice. If I'm an exchange, a payment platform, or a custody provider, what should I expect to be different when supporting confidential assets compared to traditional public ones?
Liam: That's a great question, and it's something we've spent a lot of time working through together.
We've had multiple conversations with custodians and exchanges about how they onboard privacy-enhanced assets and stablecoins.
For them, it's becoming a higher business priority because it opens up an entirely new business line—as long as they can continue meeting all of their compliance obligations.
The question we've been working through is where to strike the balance between privacy and compliance, and specifically what information should be visible, when it should be visible, and to whom. Our view is that exchanges and custodians shouldn't see every piece of data about every confidential transfer. If they did, it would undermine the value proposition of the privacy technology itself.
Instead, we've taken a risk-based approach. By default, compliance teams see activity associated with high-risk and severe-risk behavior. Think sanctions, terrorist financing, and the really bad activity that firms already build their AML and CFT programs around. For lower-risk or routine transactions, that information remains confidential.
The goal is to make sure exchanges and custodians can continue serving their customers compliantly, while protecting user privacy. That does require some operational changes. Compliance teams need to understand what they'll see, how those workflows operate, and how confidential assets fit into their existing compliance programs.
We're also building escalation workflows because there will be situations where certain people need to see more. Access to confidential transaction data shouldn't be available by default. It should happen under the appropriate circumstances and through the appropriate governance.
Abhinav: One thing we worked through together was defining those high- and severe-risk categories. In any compliance workflow, having clear risk definitions and understanding your risk appetite is critical. You can't have full privacy, and you can't have full visibility. You have to find the right balance.
Liam: Exactly.
I think that's where we're seeing the crypto-native world and the regulated financial world come together. Financial institutions see the value in the technology, but they also need it to fit into their existing compliance frameworks. Once it does, that's when we start to see much larger volumes moving onchain.
Think about the repo market. It's enormous, but most people never talk about it.
We're also talking about large-scale payroll, stablecoin payments, and tokenized securities. All of those use cases can move onchain, but they need to fit within the compliance expectations institutions already operate under while still preserving the technology that makes blockchain valuable in the first place.
Building the trust layer
Abhinav: Confidential transfers introduce new responsibilities for analytics providers like TRM. Broadly, what role do you think companies like TRM play in the future of privacy in crypto?
Liam:
I think one of our biggest roles is helping facilitate trust. When we talk about view keys and audit keys, someone has to be trusted with them. One of the things we worked through together was who should actually hold those keys.
We work with a number of stablecoin issuers, and we've taken the view that the issuer should remain the guardian of those keys. They're the ones who ultimately control access to the underlying confidential data.
TRM's role is different. Rather than holding those keys ourselves, we're requesting access from the guardian when it's appropriate and under the right conditions. In some cases, we're also implementing trusted execution environments (“TEEs”) to help protect private data throughout that process.
As more confidential assets come onchain, analytics providers have to hold themselves to a higher standard. Previously, transaction data was already public. Now there may be situations where we're handling confidential information that other participants can't see. That changes how we think about technology, internal operations, and even insider risk.
I also think one of our biggest responsibilities is education. When regulators or law enforcement hear the word "privacy," their ears naturally perk up because of some of the history in digital assets. One role we're really proud to play is helping explain that there are different approaches to privacy. With confidential transfers on Sui, we can explain how selective disclosure works, how view keys work, who has access to information, and under what circumstances additional information can be requested from an issuer.
Eventually, these use cases are going to scale. When they do, regulators, financial institutions, and law enforcement all need confidence that the technology allows them to continue doing their jobs of protecting people and safeguarding financial systems.
Abhinav: It feels similar to what we've seen with major cloud providers and enterprise software platforms. As they've taken responsibility for increasingly sensitive enterprise data, education and compliance have become just as important as the technology itself.
Liam: One hundred percent.
And it's not just regulators and law enforcement. It's also exchanges, payment firms, custodians, and stablecoin issuers. They all need to understand that they'll still be able to meet their compliance obligations. The workflows may look different, but the underlying requirements don't change.
Scaling confidential finance
Abhinav: You mentioned stablecoin issuers earlier. Looking across the ecosystem—stablecoin issuers, builders, and users—what do you think confidential transfers unlock for each of them?
Liam Glennon: At the highest level, I think they expand the total addressable market and allow existing use cases to scale.
For stablecoin issuers, I'm particularly excited about tokenization—stocks, bonds, currencies, and other financial assets moving onchain. Stablecoins become the cash leg of those transactions, and for many of those trades, the parties involved are going to want confidentiality. They don't want competitors seeing their activity, and asset managers want to protect their clients' information. Being able to provide that confidential settlement layer opens up a much broader set of institutional use cases than we've seen to date.
For builders, I think confidentiality allows them to build more competitive applications. One example that comes to mind is vaults. If every strategy inside a vault is completely public, your competitive advantage disappears almost immediately. Privacy gives builders a way to protect their strategies while still benefiting from shared blockchain infrastructure. As more financial institutions move onchain, I think that's going to become increasingly important.
We've already talked about the safety aspect—protecting people from the kinds of attacks we've seen when wallet balances are public. But I also think it gives mainstream users more confidence that they can conduct more of their financial lives onchain without exposing sensitive information to everyone else.
Abhinav: Looking ahead, if we're sitting here a year from now and confidential transfers are live on mainnet, multiple stablecoins support them, and people are actively using them, what does success look like?
Liam: There are the obvious metrics, like assets under management and transaction volume. But I think there are more interesting signals.
One is whether confidential assets are being integrated across DeFi rather than existing as standalone products. Are builders creating applications around them? Are they becoming part of broader financial workflows?
The other is the conversation itself. Today, a lot of discussions start with people asking whether privacy can work in a regulated environment. I hope those conversations evolve. Instead of asking whether confidential assets are possible, I want people asking where they make sense and how they should be used. To me, that's when we'll know the technology has matured.
