Privacy protection and regulatory requirements have always been a dilemma faced by blockchain finance. Industry explorers are breaking this deadlock with a new approach—by building "auditable privacy" infrastructure that allows institutional finance to protect sensitive data while meeting compliance needs.

The key to such solutions lies in layered design. The bottom layer relies on zero-knowledge proof technology to ensure data confidentiality, the middle layer provides privacy transaction modules (such as EVM-compatible privacy protocols), and simultaneously generates auditable evidence that can be selectively disclosed. The top layer reserves standardized interfaces for regulatory systems. In this way, investment funds can issue tokenized assets on-chain—transaction records between counterparties are fully private, but fund managers can submit cryptographic proofs to regulatory authorities, clearly demonstrating the compliance of each operation.

As regulatory frameworks for blockchain become clearer across countries, the demand for traditional financial institutions to go on-chain will accelerate. Rather than opposing regulation, building infrastructure as a connecting bridge is becoming a necessary condition for DeFi to mainstream into the financial stage. Whoever can seize the opportunity in this trillion-dollar wave of compliant financial activities going on-chain will have the chance to capture the most critical value flows.