Many people see "privacy" and "compliance" as mortal enemies. On one hand, privacy is understood as anonymity, hard to trace, and resistant to censorship; on the other hand, compliance means exposing your identity, publicizing transactions, and being subject to regulatory scrutiny at any time. Under this dichotomy, it seems that privacy naturally conflicts with regulation, and compliance is a betrayal of the decentralized spirit. But if we shift our perspective to the real financial world, you'll find that this opposing framework is fundamentally flawed.

Look at how traditional finance operates. Interbank clearing, large-scale transactions between institutions, fund holdings, corporate cash flows—these activities are mostly conducted quietly and are not disclosed to the public in real time. But don’t misunderstand; this doesn’t mean they are outside regulation. Quite the opposite, this entire system is always within the regulatory framework, just with carefully designed disclosure objects, scope, and timing. What truly supports the financial system is not the ideal of "everyone can see the ledger," but a more flexible, institutionalized approach—regulators need to be able to audit when necessary, and maintain privacy when it’s not. This is what is called "selective disclosure."

When blockchain aims to penetrate core financial services, the core issue is not "privacy yes or no," but "how to handle privacy without harming the regulatory system." Fully transparent public blockchains might be acceptable for retail traders, but for institutional investors? Forget it. Counterparty information, fund size, operational rhythm, asset composition—these are the most critical business secrets of financial institutions, and they cannot all be put on-chain for everyone to see. What institutions need is precisely a solution that can meet regulatory transparency requirements while protecting their commercial privacy. This is the real challenge of blockchain financialization and the direction for the future.