Lukas Helminger, CEO and Co-Founder of TACEO, explains why the rapid evolution of stablecoins into mainstream payment infrastructure is exposing fundamental Blockchain privacy challenges — and how cryptographic approaches such as Private Shared State can enable compliant, confidential and scalable on-chain finance.
The stablecoin market is rapidly evolving from a trading tool into a payments infrastructure powering payroll, supplier settlements and financial contracts. This long-promised shift, however, also exposes Blockchain’s fundamental weakness: when finance moves on-chain, sensitive financial details become public.
In September, AllUnity and Zebec announced a partnership to advance stablecoin payroll — a milestone that also brings to light Block chain’s privacy problem. If salaries are paid on-chain, everyone can see them. Every transaction reveals addresses, amounts and token types on public Blockchains such as Ethereum.
Financial institutions face a stark dilemma: use public Blockchains and expose confidential data or build private networks that may be incompatible with the wider web, cutting them off from the broader ecosystem of wallets, exchanges and developer tools. Neither option works for payroll, B2B transactions or contractual payments, where confidentiality, compliance and auditability must coexist.
A single privacy lapse can trigger regulatory action, lawsuits and reputational damage. Even without a breach, visible transaction flows can reveal strategy, invite manipulation and distort negotiations. The real challenge is to make transactions provable and compliant without exposing the underlying data.
The limits of closed networks
Many banks and consortia that trialled enterprise networks found the decentralised promise weakened when the network became too closed, producing siloed systems with limited interoperability and weak multi-party trust. This illustrates why the binary choice of ‘public chain vs private network’ is more complicated than first thought. As one analysis puts it: “The major reason behind banks’ failure to deal with Blockchain technology is their ambition to create private Blockchain networks that could run parallel to their existing applications.”
In practice, these systems often failed to deliver key benefits, including interoperability with external networks, genuine multi-party trust and avoidance of siloed databases dressed up as “Blockchains”. Studies of enterprise Block chain projects show many failed due to misaligned business requirements, weak governance models or technical mismatches. Relying solely on a closed network is not viable for payroll, B2B payments or complex multi-party contracts.
Cryptography stops the trade-off
Private Shared State (PSS) offers a third path, allowing multiple parties to update shared on-chain data while keeping sensitive details encrypted.
PSS combines two mature cryptographic technologies: Zero-Knowledge Proofs (ZKPs) and Multi-Party Computation (MPC). ZKPs allow a party to prove something is true — such as a valid transaction — without revealing the underlying data. MPC enables multiple parties to compute jointly on encrypted data so that no single participant ever has full visibility.
In payroll use cases, each salary can remain encrypted on-chain, while employers and payment processors can still prove totals reconcile, taxes are withheld correctly and funds are routed to approved wallets. External observers, including regulators, can verify transaction validity via cryptographic proofs without seeing raw amounts or identities.
Beyond payments
These principles extend beyond stablecoins. Banks can perform verifiable, encrypted computations for credit scoring, portfolio risk assessment or cross-institution AML checks without sharing raw customer data.
MPC-based Know Your Customer (KYC) enables selective disclosure — for example, proving age or residency — while keeping personal data encrypted and avoiding full document exposure. This reduces breach risk and eliminates repeated data collection.
A practical way forward
This approach works on public Blockchains by layering privacy on top. Token transfers include encrypted fields for amounts and recipients. Smart contracts verify zero-knowledge proofs to enforce compliance rules such as sanctions screening, transaction limits and provenance checks. MPC systems allow authorised auditors or regulators to access narrowly scoped data when legally required.
For users, the experience remains unchanged: wallets sign transactions as usual and gas costs stay predictable because most computation occurs off-chain and proofs can be efficiently batched. Institutions retain privacy without abandoning public Blockchains, while regulators gain provable oversight without direct data exposure.
This model preserves the core strengths of stablecoins — fast settlement, global interoperability and programmability — while adding privacy and verifiable compliance through cryptographic assurance rather than transparency by default.
The next era of adoption
Zero-knowledge proofs and multi-party computation have matured from research concepts into deployable systems. Regulators are increasingly open to cryptographic evidence within compliance frameworks. As digital asset infrastructure scales to institutional volumes, verifiable privacy is no longer optional — it is essential.
Issuers, custodians and infrastructure providers should adopt privacy layers that enable PSS patterns. Regulators should define how cryptographic proofs satisfy oversight requirements. Banks and FinTechs should pilot these approaches in real-world payment and payroll flows.
Getting this right will move stablecoins from trading instruments to institutional-grade payment rails and define the next era of digital money: transparent, compliant and privacy-preserving at scale.
