Skyrocket Stablecoin Adoption with Privacy

All right. So, uh, hi everybody. My name is Eric. I'm a, uh, lawyer, but I'm not your lawyer. And, uh, I practice only in DeFi.

Uh, I came primarily from staking and liquid staking. And now I moved into the privacy space. So I'm going to talk to you about uh utility of stable coins and privacy and why uh you without privacy you know there isn't uh the use case becomes quite limited. So let me start with something very simple which is without privacy p uh stable coins won't scale. The financial uh the legacy financial system for all its flaws does offer privacy and corporate structures, correspondent banks, cash all provide layers of obfiscation and that's not a bug.

It's a feature that markets many of them rely on and that is your stable coin competition and it's always available. If stable coins offer less protection, uh, less discretion, and more exposure, there is little incentive to switch. So, we talk about inclusion, efficiency, and innovation. But without privacy, we're offering users surveillance instead of security. And that's not just bad design, it's a market limiter.

If you're a manufacturer, it relieves your it reveals your supply chain. If you're a money manager, it reveals your alpha. If you're an employer, it reveals your payroll. And if we want stable coins to scale with real users, real volume, and real institutional trust, you must break the bottleneck, which is the lack of privacy. So, let's talk about what that takes.

So public by default transactions expose everything you do, how much you pay, uh how much, when, and why. That level of exposure is not neutral. It's actually quite dangerous. If you're an employer, it shows your entire payroll. If you're a trader, your strategy is traceable.

If you donate to a cause, it's tied to your identity. That activism, that exposure creates chilling effect. people self- censor, institutions stay away, and users hesitate. Uh, meanwhile, the cost of legitimate compliance regimes today are over 300 billion annually. So, for every $1 in illicit funds that are stopped, $120 is the cost to a legitimate activity.

If you implement answers to yesterday's problems instead of solving for today's privacy challenge, the legacy cost will land on you and your stable coin. The result is the demand side gets capped before it can grow. And you are not just losing users, you are driving them to stay in fiat. So we've inherited a dangerous myth which is mass visibility equals effective compliance but surveillance is not security. In fact the recent data shows that 99% of stable coin activity is listenit and by contrast the fiat system by best credible estimate is achieved a maximum 2% in intradiction rate over consistent over 35 years.

This means that stable coins can are and are delivering a 100x times better outcome in preventing illicit finance without a need to mass collect names, identities or transaction histories. You can collect everything and have a 1x success rate or you can use privacy-enhancing technologies and have a 100x better outcome. So those privacy-enhancing technologies allow for selective disclosure, provable compliance without exposing everyone everywhere all the time. Zero knowledge proof can prove legitimacy without revealing identities. Onchain attestation can prove credentials without leaking personal data.

What we need isn't more data. What we need is better tools. And those tools were not possible in the legacy system and your cost of compliance goes down because the cost of compliance is a gas fee. So let's just touch on the locked out use cases. There are many more but because of missing privacy there's entire markets that are simply missed out on.

Institutional investors can't touch stable coins without transaction privacy. Businesses will not run their back-end finance in public. And human rights organizations can't risk exposure. Medical and legal professionals cannot risk confidentiality. Financial service providers who have a fiduciary duty to protect client data also can't use your stable coin.

So meanwhile, legacy systems retain the edge in all of this. So this is an often forgotten point inside the echo chamber. The institutions are coming. They've been coming since 2017 and they're still not here and they're still a long way to go. Not because they're innovative, by the way, the legacy system, but because they offer a level of discreetness that is not present in stable coins.

So privacy isn't a loophole. It's the missing infrastructure. So we have the tools to build differently. As I already mentioned, you don't have to redesign your protocol from scratch. Today, privacy can be integrated as an optional layer.

You using production grade tools already live and proven at scale. This includes transacting shielding that works onchain audibility with without public exposure and modular compliance through user controlled proofs. It all exists, but if you think somebody else is going to solve it, you're wrong. You need to build it into the stable coin. You need to make it available.

This isn't about avoiding regulation. It's about enabling adoption by protecting confidentiality, commercial integrity, and user rights. So, privacy doesn't require reinvention. It requires integration. So, we need to build for real world utility.

If we want stable coins to fulfill their promise, privacy has to be the foundation and not the fix. Support the development. So your call to action is to support the development and integration of privacy enhancing technologies designed for discretion not just for disclosure. Build tools people can actually trust because what is the utility of stablecoin? There was a great comment this morning by Danell from Stellar uh where she said um if you build an asset but like you know people got to want to use it and without building the things around it it just sits there and so build tools people can actually trust and privacy isn't the problem it is the unlock and that's it.

So, thanks a lot. There's some time. Does anybody have any questions? Look at that. I fixed their tardiness by going fast.

Well, all right. Thank you very much and uh see you around.