Institutions Drive Demand for Blockchain Privacy Solutions, Says Matter Labs CEO
The growing emphasis on privacy within the blockchain ecosystem is increasingly tied to the evolving needs of institutional players. According to Alex Gluchowski, CEO of Matter Labs—the team behind the Ethereum Layer-2 network ZKsync—privacy is no longer just a niche concern for crypto enthusiasts. It has become a central requirement for enterprises aiming to utilize blockchain for real-world financial operations.
While the retail crypto sector has experienced stagnation, particularly after speculative trends lost momentum, institutions are beginning to explore blockchain as a viable settlement layer. However, they are hitting a clear obstacle: the lack of system-level privacy. Without the ability to conduct confidential transactions, many firms remain hesitant to move real payment flows onchain.
Gluchowski distinguishes two types of privacy in the blockchain world. “Cypherpunk privacy” refers to user-level anonymity—obscuring individual wallet addresses and transaction histories. On the other hand, “institutional privacy” focuses on maintaining full internal transparency while shielding that data from the public and competitors. This latter model is critical for compliance, confidentiality, and operational security in enterprise environments.
In recent years, privacy tokens like Zcash (ZEC) have surged in both price and attention, even during broader market downturns. However, most discussions have centered on their consumer-facing applications. Behind the scenes, banks and financial institutions have been quietly researching zero-knowledge (ZK) technologies. These cryptographic tools allow for private computations on public blockchains without revealing the underlying data—an essential feature for organizations that must protect sensitive financial flows.
Gluchowski explains that during earlier crypto cycles, privacy was often sidelined due to intense regulatory scrutiny. Projects like Tornado Cash were blacklisted, and exchanges removed privacy coins to avoid compliance risks. But as regulatory perspectives shift, especially in the United States, privacy is now being re-evaluated as a technical necessity rather than a red flag.
“There’s been a complete change in tone,” Gluchowski notes. “Previously, institutions avoided crypto entirely. Now, there’s pressure to adopt this technology to stay competitive.”
This shift is not theoretical—data shows that over 140 companies held more than $137 billion in crypto assets on their balance sheets as of November. Yet Gluchowski emphasizes that holding crypto is only the first step. For institutions to truly leverage blockchain for payments or settlements, a robust privacy infrastructure must be in place.
Earlier attempts at creating private enterprise blockchains, such as those using Hyperledger Fabric or Corda, failed to gain significant traction. These networks were siloed and lacked integration with the broader public blockchain ecosystem, which limited their utility. “They were essentially glorified databases,” Gluchowski said, “disconnected from the liquidity and interoperability of public chains.”
The new wave of solutions, powered by zero-knowledge proofs and Layer-2 scaling technologies like ZKsync, aims to bridge this gap. These platforms allow for private execution environments atop public infrastructure. In such a setup, institutions retain complete oversight of their own transactions while ensuring that no external party can access sensitive data.
Crucially, Gluchowski argues that real privacy must be cryptographically enforced—not contractually agreed upon. “If the data ever leaves your control and depends on an NDA, then it’s not truly private. That’s a promise, not a guarantee,” he states.
This perspective highlights a fundamental principle for institutional adoption: privacy must be embedded at the protocol level, not layered on top through legal agreements. Only then can financial institutions trust blockchain infrastructure for core operations.
Beyond finance, the implications of institutional-grade privacy extend to sectors like healthcare, supply chain management, and identity verification. In each case, sensitive data must be handled with care, and zero-knowledge technology offers a way to reconcile transparency with confidentiality.
As the Ethereum ecosystem evolves, privacy-enhancing technologies are becoming more integrated into its core architecture. Projects like ZKsync are not only focused on scaling but also on enabling secure, private computation. This dual focus positions them as foundational layers for the next generation of blockchain use cases.
Institutions are also pushing for clearer regulatory frameworks that distinguish between privacy as a tool and privacy as a risk. This nuanced understanding is essential for fostering innovation while maintaining compliance. As governments and regulators become more educated on cryptographic privacy, the stigma around technologies like ZK-proofs is beginning to fade.
Moreover, interoperability between private and public systems is emerging as a key design consideration. Future financial infrastructure will likely be hybrid—combining the security and transparency of public blockchains with the confidentiality and control of private execution environments.
The long-term vision, as Gluchowski sees it, is one where institutions operate seamlessly on public blockchains without compromising data privacy or regulatory requirements. This will require collaboration between developers, regulators, and enterprise stakeholders to build systems that are both secure and scalable.
In conclusion, privacy is no longer a fringe feature in the blockchain space—it is becoming a foundational requirement for institutional adoption. With technologies like zero-knowledge proofs and platforms like ZKsync leading the way, the dream of a truly private, decentralized financial system may be closer than ever. As enterprises continue to explore blockchain’s potential, the demand for robust, system-level privacy will only grow, shaping the next chapter in the evolution of decentralized finance.