The uncomfortable question is simple: how is a regulated institution supposed to use public infrastructure without exposing client data, trading strategy, or liquidity positions in the process?
In theory, transparency builds trust. In practice, full transparency can destabilize markets and violate confidentiality obligations. Banks aren’t hiding wrongdoing; they’re protecting counterparties, complying with data laws, and managing competitive risk. When everything settles on open rails by default, compliance teams don’t see innovation they see leakage.
Most current solutions feel patched together. Privacy gets added as an exception: special permissions, off-chain side letters, selective disclosures. It works until it doesn’t. Every workaround increases operational cost and legal uncertainty. And regulated finance already runs on tight margins and strict accountability. If a system forces institutions to choose between efficiency and compliance, they will default to the old system.
Privacy by design feels less ideological and more practical. It means auditability exists where required, but sensitive information isn’t publicly broadcast as collateral damage. It aligns better with settlement finality, reporting obligations, and basic human behavior institutions act conservatively when risk is ambiguous.
Infrastructure like @Vanarchain only matters if it understands this tension. Not as hype, but as plumbing that regulators can tolerate and operators can trust.
Who would use it? Institutions that want efficiency without reputational risk. It might work if privacy is structural. It fails if privacy is cosmetic.
