The numbers for January 2026 have Wall Street on edge—the global RWA tokenization market surpasses $500 billion. Financial giants like Goldman Sachs, JPMorgan Chase, and BlackRock are all launching internal testing of blockchain settlement systems, but they are all stuck on the same problem: how to ensure transaction transparency without exposing customer holdings data?

Traditional centralized databases can achieve privacy protection, but that defeats the purpose of blockchain. Fully open Ethereum is transparent but completely incompatible with the confidentiality requirements of the financial industry. This dilemma is a real pain point that blockchain technology faces in the financial sector.

Let’s take a look at the current state of the RWA track. U.S. Treasuries, real estate, private equity, art, carbon credits… almost all conceivable assets are being experimented with for tokenization. The problem is that very few projects have successfully completed the full process. Most projects fail at three stages: first, compliant issuance—how to prove asset ownership; second, secondary market trading—how to prevent money laundering and insider trading; and finally, cross-border settlement—meeting the regulatory differences across jurisdictions.

A common solution is to implement KYC at the application layer, but this approach is inefficient and risky—each dApp must verify users anew, and privacy data is scattered across countless centralized servers, making it vulnerable to hacking or government confiscation.

Some projects have shifted their approach to the protocol layer. By using zero-knowledge proof technology, they can ensure transaction transparency while protecting user identities and holdings. This way, they meet the transparency required by financial regulators while safeguarding user privacy. Only with compliance frameworks from licensed exchanges can a truly feasible boundary be drawn between transparency and privacy.