EthSystems Bets on Privacy to Bring Banks onto Public Blockchains

A new startup spun out of the Ethereum Foundation this month is betting that privacy, not scalability, is the real barrier keeping banks and financial institutions off public blockchains.

Building Confidentiality, Not a New Blockchain

EthSystems emerged from the Ethereum Foundation’s Institutional Privacy Task Force and focuses on helping banks, asset managers, and governments use Ethereum for tokenized assets and stablecoins without exposing sensitive transaction details. Rather than building a separate chain, the company helps institutions deploy privacy tools while still settling transactions on Ethereum itself. Co-founder Mo Jalil explained that confidentiality doesn’t necessarily mean full anonymity, but rather having proper controls over who can access specific information.

Working Alongside Existing Privacy Projects

The startup enters a space already occupied by projects like Canton Network, backed by major financial institutions, along with Ethereum native privacy protocols. EthSystems says it isn’t trying to compete with these efforts, but instead plans to advise institutions on privacy architecture, build custom infrastructure when needed, and integrate existing technologies based on client needs.

From Nonprofit Research to For-Profit Business

EthSystems is one of several organizations that emerged from a broader restructuring at the Ethereum Foundation. The team decided to spin out as a commercial entity after repeatedly encountering institutional demand to bring proof-of-concept work into production, something the foundation wasn’t structured to support.

Institutional Demand Is Shifting

According to Jalil, conversations with financial institutions have evolved significantly over the past year, moving from early stage innovation teams to actual trading desks and asset managers looking to move real financial activity onchain. He argues that cryptography and privacy infrastructure are now the key missing pieces bridging public blockchains and institutional adoption.