Mo Jalil, co-founder of EthSystems—a firm recently spun out from the Ethereum Foundation—stated that privacy remains the single largest obstacle preventing mainstream banks from engaging with public blockchain networks. The comments, made in an interview, come as financial institutions increasingly explore distributed ledger technology but face unresolved regulatory and operational concerns around data confidentiality.
Jalil clarified that the privacy requirements of financial institutions go far beyond simple anonymity. Banks need granular control over who can view specific data, when access is granted, and under what conditions. This includes the ability to selectively disclose transaction details to regulators while keeping them hidden from competitors or the general public. “Nearly all financial institutions require some level of confidentiality,” he explained. “It’s not about hiding everything—it’s about having control over what is visible, to whom, and for how long.”
Rather than building an entirely new privacy layer from scratch, EthSystems plans to collaborate with existing privacy projects rather than compete with them. Jalil emphasized that the firm aims to integrate and enhance existing tools for institutional use, bridging the gap between the permissionless nature of public blockchains and the strict compliance frameworks banks operate under. By leveraging tools already developed by the broader privacy community, EthSystems hopes to reduce duplication of effort and accelerate adoption.
The conversation around privacy on public blockchains has intensified as more regulated entities experiment with tokenization, cross‑border payments, and digital asset custody. Without robust privacy mechanisms, many of these use cases remain impractical or legally risky for banks. If EthSystems succeeds in delivering a workable privacy infrastructure, it could unlock significant institutional participation in decentralized finance (DeFi) and other blockchain‑based financial services—a development that would reshape the competitive landscape of the industry.
