Coinbase has confirmed that its network is working on implementing private transactions. The project is developing after the acquisition of the Iron Fish team and has already become one of the most discussed topics in the community. The main question is how to combine privacy with regulatory requirements.
Coinbase is testing a new strategy
The head of Coinbase said that the project joined Base to develop tools for private transfers. The company is preparing a major update that should expand the network’s functionality and make it more flexible.
The community’s reaction was mixed. Some doubted the idea: why would a centralized platform connected to KYC build privacy mechanisms? Others, on the contrary, saw this as an important step toward future infrastructure where anonymity becomes a basic user right.
One of the popular comments on X summed up the general mood:
‘Why would a centralized platform promote privacy if it already requires KYC?’
Despite the skepticism, many analysts believe the market is already moving toward private finance. Blockchain transparency is convenient for auditors, but without privacy, mass adoption of cryptocurrencies is impossible.
Coin Center urges not to turn blockchain into a surveillance system
Against this backdrop, Coin Center sent recommendations to the US Treasury on protecting users’ financial privacy. The organization warned that forcing total control over transactions on public blockchains would create a ‘financial panopticon’ — a mechanism of constant surveillance comparable to a digital version of CBDC.
There was also a proposal to allow the issuance of stablecoins on ZK blockchains, where AML and KYC can be implemented without disclosing personal data. The group also advocated for the introduction of digital IDs according to standards that would allow identity verification without constant collection of passport data.
Separately, the organization supported the use of attribute-based proofs — a system where the user reveals only necessary facts, such as ‘US citizen’ or ‘not on the sanctions list,’ without providing extra information. According to Coin Center experts, such solutions will balance control and privacy, preserving citizens’ right to financial secrecy.
Ethereum Foundation strengthens work on privacy
Meanwhile, the Ethereum Foundation announced the creation of the Privacy Cluster — a group of 47 developers working on projects in the field of secure transactions, selective identity disclosure, and data scaling. This is a continuation of a program that started back in 2018.
The foundation notes: without the implementation of privacy technologies, Ethereum risks turning ‘into the basis of global surveillance, not an infrastructure of freedom.’
In parallel, Vitalik Buterin presented research on GKR technology, capable of verifying up to 2 million computations per second on ordinary laptops. This method reduces computational load dozens of times and allows for cheaper transactions while maintaining a high level of privacy.
Transparency versus personal freedom
The discussion about balancing openness and privacy goes beyond technology. Analysts emphasized that excessive transparency makes cryptocurrency unsuitable for real-world use.
‘If your employer, competitor, or a random person can see your balance — that’s not transparency, that’s a loss of personal freedom,’ he said, comparing the situation to the Internet of the 1990s, when encryption had not yet become standard.
According to experts, as long as blockchain remains completely public, it cannot become a full-fledged financial system. Privacy is not an obstacle, but a necessary condition for a mature market.
The fate of Tornado Cash and pressure on developers
Interest in privacy is growing amid the ongoing case against the creators of Tornado Cash. One of the developers was found guilty on one count, while the second continues to fight in court in Europe.
In response, the Ethereum Foundation and Keyring Network launched a fundraising campaign for their defense, calling it ‘a fight for the principles of the open Internet.’
What’s next?
Coinbase with the Base project is becoming part of a new wave — a privacy movement that can no longer be stopped. In the coming months, the company will present details of a solution that should combine security, compliance, and the right to financial anonymity.
The bottom line is clear: the industry faces the challenge of finding a compromise between the law and personal freedom. The way this is resolved will determine not only the future of Base, but the direction of the entire crypto economy.
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