EthSystems Bets Bank Privacy Needs, Not Scalability, Will Unlock Public Ethereum
Key points
- EthSystems spun out of the Ethereum Foundation's Institutional Privacy Task Force earlier in July 2026, becoming a for-profit company focused on confidentiality infrastructure for banks, asset managers, and governments.
- Co-founder Mo Jalil argues that confidentiality, not scalability, is the principal obstacle preventing financial institutions from settling activity on public Ethereum.
- The company plans to advise on privacy architecture, build custom infrastructure, and publish open-source research, working alongside existing protocols such as Aztec and Miden rather than competing with them.
- Rival institutional privacy efforts include the Canton Network, backed by Goldman Sachs, BNP Paribas, and DTCC.
- The commercial structure was chosen because the Ethereum Foundation could not accept fees for taking proof-of-concepts into production, making a for-profit model more sustainable for engaging large-institution procurement processes.
EthSystems, a for-profit startup that spun out of the Ethereum Foundation earlier this month, is building confidentiality infrastructure for banks, asset managers, and governments seeking to use public Ethereum for tokenised assets and stablecoins. The company emerged from the Foundation’s Institutional Privacy Task Force as part of a broader restructuring that distributed responsibilities previously held within the nonprofit, alongside sister organisations EthLabs and Ethereum Institutional.
Co-founder Mo Jalil frames confidentiality rather than scalability as the primary barrier to institutional adoption of public blockchains. His argument is that financial institutions do not need anonymity; they need granular controls over who can view transaction data and under what conditions. EthSystems positions itself as an integrator and adviser across the existing privacy ecosystem, covering protocols such as Aztec and Miden, rather than rebuilding the privacy stack from scratch. It also plans to publish open-source research on institutional blockchain adoption.
The pivot to a commercial model reflects demand the team encountered while still inside the Foundation, where proof-of-concept work repeatedly prompted institutions to ask whether the team could be paid to take projects into production. Competing efforts in the institutional privacy space include the Canton Network, which counts Goldman Sachs, BNP Paribas, and DTCC among its backers. Jalil’s read is that institutional conversations have shifted materially over the past year, moving from innovation-team experiments toward procurement-level production deployments, which suggests that the window for advisory and build engagements is opening rather than narrowing.