Ethereum Foundation Privacy Spinout EthSystems Bets Banks Need Confidentiality, Not Just Speed

For years, the pitch to banks about public blockchains has focused on scalability. A new company spun out of the Ethereum Foundation is betting that scalability was never the real obstacle — privacy was.

EthSystems launched in mid-July as a for-profit engineering company, growing directly out of the Ethereum Foundation’s Institutional Privacy Task Force. Its founding team, Mo Jalil, Oskar Thorén, and Aaryamann Challani, built the underlying technology while running that task force before spinning the work out into its own company.

The core argument is straightforward: confidentiality, not transaction throughput, is what actually keeps banks and other regulated financial institutions off public Ethereum. A bank simply cannot put its clients’ trading activity, balances, or counterparty relationships onto a ledger anyone can read, no matter how fast that ledger settles transactions.

EthSystems’ answer is a technique it calls selective disclosure, where each participant in a transaction sees only the information relevant to them, and nothing more. The product lineup built around this includes confidential settlement, private bond issuance, and identity tools, all designed to run directly on Ethereum’s existing public network rather than requiring institutions to retreat into permissioned, walled-off blockchains instead.

That last point is the strategic bet: rather than accepting that banks will only ever use private, institution-only blockchains, EthSystems is wagering that the right privacy tooling can bring serious financial activity onto the same public network everyone else already uses. Backing from Bitmine, Sharplink, and Ethereum co-founder Joe Lubin suggests at least some believe that bet is worth making. EthSystems joins EthLabs and Ethereum Institutional as recent spinouts reflecting a broader reorganization in how the Ethereum ecosystem approaches institutional adoption.

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