An Ethereum Foundation spinout is making a bold bet: the reason big banks have not fully embraced public blockchains is not about speed or fees — it is about privacy. And the startup, called EthSystems, just emerged from stealth to solve exactly that problem.
By Keisha Williams | July 29, 2026
The Hook: Why Banks Are Quietly Knocking on Ethereum’s Door
For years, the crypto world assumed that if public blockchains like Ethereum could just get faster and cheaper, Wall Street would come rushing in. But according to EthSystems, a new startup that spun out of the Ethereum Foundation’s Institutional Privacy Task Force earlier in July 2026, that assumption was wrong.
The real obstacle? Banks cannot do business on a public ledger where anyone can see every transaction. Imagine if your bank account balance and every payment you made were visible to the entire world — that is essentially what using a public blockchain looks like today without extra privacy tools.
EthSystems is building privacy infrastructure specifically for banks, asset managers, and governments that want to use Ethereum for tokenized assets, stablecoins, and other financial applications — without exposing their sensitive data to competitors or the public.
“Almost every single financial institution requires some level of confidentiality,” Mo Jalil, co-founder of EthSystems, told CoinDesk in an interview. “Confidentiality doesn’t necessarily mean something has to be anonymous or hidden. There just needs to be controls over who sees what, when and how.”
Why Banks Need Privacy on Blockchains — Explained Simply
Think of a public blockchain like a giant glass window. Every transaction — who sent what to whom, and how much — is visible to anyone who cares to look. For crypto enthusiasts, that transparency is a feature. For a bank handling client funds, it is a dealbreaker.
If Goldman Sachs moves a large position on-chain, competitors could front-run the trade. If an asset manager settles client transactions on Ethereum, they would be exposing their clients’ financial activity to the world. Regulators would also have concerns about whether public blockchains meet data protection requirements.
This is where EthSystems comes in. Rather than building an entirely new blockchain — there are already plenty of those — the startup takes a different approach. It advises institutions on privacy architecture, builds custom infrastructure where needed, and publishes open-source research on how banks can transact privately while still settling on Ethereum.
The key insight is that you do not need to choose between transparency and privacy. EthSystems helps institutions deploy technology that keeps sensitive transaction details confidential while still using Ethereum’s public network as the settlement layer — the final destination where transactions are officially recorded.
Jalil noted that institutional demand has fundamentally shifted. Banks are no longer running experimental blockchain pilots to see if the technology works. They are now looking for production-ready deployments — real systems handling real money — and they need privacy tools that meet regulatory requirements.
The Competition: EthSystems Is Not Alone
EthSystems is entering a increasingly crowded field. Several other projects are also racing to solve the institutional privacy problem on blockchains.
- Canton Network — Backed by major financial institutions including Goldman Sachs, BNP Paribas, and DTCC, this project is building privacy-first infrastructure designed specifically for institutional use.
- Aztec — An Ethereum-native privacy protocol that uses advanced cryptography to shield transactions while still settling on the public Ethereum network.
- Miden — Another Ethereum-focused privacy project developing technology that lets users prove transactions are valid without revealing the underlying data.
What sets EthSystems apart is its consulting-and-build model. Rather than offering a single product, the company plans to assess each institution’s specific needs, design custom privacy architecture, and even build bespoke infrastructure. This is more like hiring a specialized contractor than buying off-the-shelf software.
The startup also benefits from its Ethereum Foundation pedigree. Coming out of the Institutional Privacy Task Force gives EthSystems credibility and deep technical knowledge of Ethereum’s inner workings — something that matters when you are asking banks to trust their operations to a public blockchain.
What This Means for Your Portfolio
You might be wondering: this sounds interesting, but why should I care as a regular crypto investor? The answer comes down to one word — adoption.
The more institutions that use Ethereum and other public blockchains for real financial activity, the more demand there is for the underlying network. When banks settle transactions on Ethereum, they pay gas fees in ETH. When asset managers issue tokenized securities, those assets live on-chain. Every new institutional user adds to the network’s activity and value.
Right now, Ethereum is trading at approximately 1,919 USD, according to CoinGecko data. The price has been relatively subdued compared to its all-time highs. But if startups like EthSystems succeed in removing the privacy barrier, it could unlock a massive wave of institutional capital flowing through public blockchains.
Think about it this way: the global banking system handles trillions of dollars in transactions daily. Even a small fraction of that activity moving onto Ethereum would represent enormous growth. Privacy infrastructure is the missing puzzle piece that could make that migration possible.
For Bitcoin investors, currently trading around 63,866 USD, this matters too. While EthSystems is focused on Ethereum, the broader trend of institutions adopting blockchain technology — including privacy solutions — signals growing mainstream acceptance of crypto infrastructure. What starts on Ethereum often expands to other networks.
The Bottom Line
EthSystems represents a quietly important shift in the crypto landscape. For years, the industry focused on making blockchains faster and cheaper. Now, the focus is turning to making them private enough for Wall Street to actually use.
The startup’s emergence from the Ethereum Foundation signals that the organization behind the world’s second-largest cryptocurrency recognizes privacy as a critical infrastructure need. With competitors like Canton Network, Aztec, and Miden all pursuing similar goals, the race to bring institutional privacy to public blockchains is heating up.
For everyday investors, the takeaway is simple: watch the privacy infrastructure space. If banks start moving real money onto public blockchains because privacy concerns are solved, the cryptocurrencies that power those networks stand to benefit significantly. EthSystems may be a new name, but the trend it represents could shape the next chapter of crypto adoption.
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
mo jalil gets it. banks dont care about tps or gas fees, they care about their counterparty data leaking. been saying this since 2022
privacy is literally the only thing missing from public chains for institutions. everyone obsessed with tps while banks just want their counterparty data hidden
ETH at 1919 and we have actual infrastructure being built for wall street. bear market builds i guess
spun out of the EF institutional privacy task force and immediately raised how much? article doesn’t say. feels like a detail that matters
^ this. stealth mode exit usually means funding round announcement is next. watch for the a16z tweet within 2 weeks
canton network has been doing this exact thing for over a year with goldman and DTCC. ethsystems is late to the party imo
true but canton is permissioned and closed. ethsystems settles on mainnet eth which is a different value prop entirely
the EF actually had an Institutional Privacy Task Force? genuinely did not know that was a thing. shows how much goes on behind closed doors at these foundations
the consulting model is smart tbh. every bank has different compliance needs, a one-size-fits-all product was never gonna work
^ exactly. you cant sell a privacy saaS to jpmorgan the same way youd sell it to a credit union