Privacy push as StarkWare and Sui move toward compliance-ready confidential transfers

StarkWare and Sui launched new privacy features this week that allow users to conceal transaction data without fully sacrificing auditability or regulatory oversight.

StarkWare said Tuesday that it launched STRK20, a privacy framework for ERC-20 tokens on Starknet that allows users to shield balances and transaction data while providing mechanisms for disclosure under certain circumstances.

Eli Ben-Sasson, co-founder and CEO of StarkWare, told Cointelegraph that “compliance-ready” does not mean STRK20 itself determines legal compliance or guarantees regulatory approval. He said the framework is built around a risk-based model in which privacy is conditional rather than absolute, with screening applied at entry into the shielded pool and viewing-key-based disclosure available under lawful request.

Separately, Sui launched a public beta for confidential transfers, a feature that conceals transaction amounts while allowing authorized parties to access information when required for auditing or compliance purposes.

The launches reflect a broader shift in crypto privacy away from complete anonymity and toward models favored by institutions that incorporate audit and disclosure mechanisms.

Sui launches confidential transfers. Source: Sui

Compliance shift in privacy systems

In recent weeks, privacy-focused projects have been forced to address questions around both oversight and reliability.

Zama, a blockchain privacy project, said on June 2 that it would accelerate its compliance roadmap. The announcement came after a court-ordered freeze of about $12.5 million in $USDC held in its confidential $USDC wrapper, which was later lifted following resolution of the underlying legal request.

The project subsequently highlighted its disclosure mechanisms and approach to regulatory coordination for encrypted transactions.

Related: Canton, ZKsync clash over how blockchains enforce rules

The broader push also comes amid renewed scrutiny of one of the crypto industry's most prominent privacy projects after Zcash disclosed a bug that raised concerns that counterfeit tokens could have been created undetected.

Zcash developers said the vulnerability was addressed through an emergency network upgrade completed in early June, with no confirmed evidence of exploitation, though the nature of shielded pools makes it difficult to fully reconstruct transaction history after vulnerabilities are disclosed.