Privacy Is the New Power: Why Blockchain Networks Are Rethinking Transparency
Digital Asset CEO Yuval Rooz Warns Transparency-First Blockchains Are Creating a Privacy Crisis
As blockchain technology pushes deeper into mainstream finance, concerns over privacy are resurfacing with new urgency. Yuval Rooz, co-founder and chief executive of Digital Asset, is sounding the alarm, arguing that many of today’s blockchain networks are fundamentally misaligned with the real-world needs of users, institutions, and regulators.
According to Rooz, the industry’s long-standing emphasis on radical transparency may now be working against broader adoption. While transparency was once seen as blockchain’s defining strength, he believes it has evolved into a structural weakness that exposes users and institutions to unnecessary risks.
As financial institutions increasingly explore blockchain-based infrastructure, Rooz says privacy is no longer a niche feature. It is becoming a core requirement.
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| Source: XPost |
Transparency Was the Promise, But Not the Full Solution
When blockchain technology first emerged, full transparency was viewed as revolutionary. Public ledgers allowed anyone to verify transactions, reducing the need for trust in centralized intermediaries. For early adopters, this openness represented a radical break from opaque financial systems.
However, Rooz argues that what once inspired confidence is now creating unintended consequences.
“Most mainstream blockchain transactions today are highly transparent,” Rooz said in recent remarks, noting that this level of openness does not equate to true privacy. Instead, he contends, it exposes transaction data in ways that can be exploited before trades are even finalized.
On many public blockchains, transaction details are visible in real time, allowing observers to analyze, anticipate, and sometimes front-run activity. This creates risks not just for retail users, but also for large institutions that rely on predictable and secure settlement processes.
Front-Running and Market Disadvantages
One of Rooz’s central criticisms is that transparent blockchains enable sophisticated actors to gain unfair advantages. By monitoring pending transactions, traders can insert their own transactions ahead of others, influencing outcomes and distorting markets.
In traditional financial systems, transactions are typically shielded until settlement. This protects participants from being exploited based on incomplete or early information. Rooz believes blockchain networks intended for serious financial use should adopt similar protections.
“In traditional markets, transactions are not broadcast to the world before they settle,” he explained. “Blockchain should learn from that.”
Without such safeguards, he warns, blockchain risks replicating some of the worst inefficiencies of high-frequency trading environments, while adding new vulnerabilities unique to decentralized systems.
Privacy Is Not Anonymity
Rooz also addressed what he sees as a fundamental misunderstanding in the crypto debate: the idea that privacy and regulation are inherently incompatible.
He argues that most regulators are not opposed to privacy itself. Their primary concern is anonymity, particularly when it removes accountability and complicates enforcement against financial crime.
“Regulators are opposed to anonymity, not privacy,” Rooz said, drawing a clear distinction between the two concepts.
Privacy, in his view, is about protecting sensitive information from unnecessary public exposure. Anonymity, by contrast, can obscure identities entirely, making it difficult to trace wrongdoing. Conflating the two has led to regulatory tension and slowed adoption.
This distinction is increasingly important as governments seek to balance innovation with oversight.
Why Institutions Are Demanding Privacy
As banks, asset managers, and infrastructure providers explore blockchain adoption, their requirements differ sharply from those of early crypto enthusiasts. Institutions handle sensitive data, proprietary strategies, and large volumes of capital. Broadcasting that information publicly is simply not viable.
Rooz notes that institutions are not asking for secrecy to evade oversight. Instead, they want systems that mirror existing financial norms, where transactions are private by default but auditable when necessary.
This approach allows regulators to access relevant data under defined conditions, while protecting participants from constant public exposure. Without such features, Rooz believes institutional adoption will remain limited.
Designing for Both Privacy and Compliance
Rather than framing privacy and regulation as opposing forces, Rooz argues they can be designed to work together. The solution, he says, lies in thoughtful architecture.
A well-designed blockchain can conceal sensitive transaction details from the public while still allowing regulators and authorized parties to view data when legally required. This model preserves accountability without sacrificing security or efficiency.
This philosophy has guided Digital Asset’s development efforts, which focus on enterprise-grade blockchain infrastructure tailored to regulated markets. Rooz believes this middle ground is essential for blockchain to move beyond experimentation and into critical financial systems.
A Changing Regulatory Environment
Rooz’s comments come at a time when U.S. lawmakers are showing increased interest in providing clearer frameworks for digital assets. Recent legislative initiatives, including proposals such as the GENIUS Act, signal a shift toward constructive engagement rather than outright skepticism.
Supporters argue that regulatory clarity can encourage innovation while maintaining safeguards. For companies building compliant blockchain solutions, this evolving environment presents new opportunities.
Digital Asset recently secured $135 million in funding, reflecting growing investor confidence in privacy-focused, regulation-ready blockchain platforms. Rooz views this as validation of his thesis that the industry is moving toward more pragmatic designs.
Privacy as a Competitive Advantage
In the next phase of blockchain adoption, Rooz believes privacy will become a differentiator rather than a liability. Networks that fail to address privacy concerns may struggle to attract institutional users, regardless of their technical sophistication.
As blockchain applications expand into areas such as tokenized assets, settlement infrastructure, and cross-border payments, the stakes are rising. Errors, leaks, or exploitation could have systemic consequences.
By contrast, privacy-conscious systems could unlock use cases that were previously impractical, enabling blockchain to operate quietly and efficiently behind the scenes of global finance.
Shifting the Industry Narrative
For years, parts of the crypto industry framed privacy as a controversial or even suspicious feature. Rooz argues that narrative is outdated. In reality, privacy is a standard expectation in nearly every other area of finance and technology.
Email, banking, and enterprise software all rely on privacy by default, with controlled access for oversight. Blockchain, he says, should be no different.
This shift in thinking reflects a maturing industry that is moving beyond ideological debates toward practical solutions.
What Comes Next for Blockchain Privacy
Looking ahead, Rooz expects privacy to play a central role in shaping the next generation of blockchain networks. As regulators, institutions, and developers align around shared goals, the industry may finally move past the transparency-versus-regulation stalemate.
He believes the future of blockchain lies not in radical openness, but in selective disclosure. Systems that can protect users while satisfying regulators are more likely to achieve lasting relevance.
For policymakers, the message is equally clear. Treating privacy as an obstacle may hinder innovation, while recognizing it as a necessity could accelerate responsible adoption.
A Critical Moment for the Industry
Blockchain is no longer an experimental technology confined to niche communities. It is increasingly being considered as infrastructure for real-world finance. At this stage, design choices carry long-term consequences.
Rooz’s warnings highlight a critical inflection point. The industry must decide whether to adapt its principles to meet real-world needs or risk remaining on the fringes.
As privacy moves from a controversial topic to a foundational requirement, blockchain’s next chapter may be defined less by ideology and more by integration into existing systems.
For users, institutions, and regulators alike, that evolution could determine whether blockchain fulfills its promise or falls short.
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Writer @Ethan
Ethan Collins is a passionate crypto journalist and blockchain enthusiast, always on the hunt for the latest trends shaking up the digital finance world. With a knack for turning complex blockchain developments into engaging, easy-to-understand stories, he keeps readers ahead of the curve in the fast-paced crypto universe. Whether it’s Bitcoin, Ethereum, or emerging altcoins, Ethan dives deep into the markets to uncover insights, rumors, and opportunities that matter to crypto fans everywhere.
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