For blockchain to truly enter the regulated financial core, one old problem cannot be avoided—privacy and compliance are like two parallel lines, always difficult to intersect. Public blockchains expose all transaction details—accounts, amounts, contract logic—making transparency a strength for decentralization but a nightmare for financial institutions. Confidential business secrets, counterparties, transaction amounts—these core elements of traditional finance are all publicly available on-chain. Which bank would dare to move its business to such a place?

The other extreme is pure privacy coins. Monero and Zcash use ring signatures and zero-knowledge proofs to hide transactions completely, effectively protecting users. However, the cost is that regulators cannot verify anything, and anti-money laundering (AML), KYC, and other financial bottom lines become meaningless under pure privacy architectures. The result is: financial institutions cannot use them, and regulators refuse them. These coins are forever excluded from the formal financial system.

This is the biggest bottleneck in asset tokenization implementation. It’s not a matter of technology being insufficient, but that no one can meet both sides’ needs simultaneously—protecting transaction confidentiality on one hand, and allowing regulators to see what they need on the other.

Dusk Network’s approach is different. It doesn’t choose between the two; instead, it starts from the underlying protocol. Through cryptographic innovation and compliance primitive design, it creates a technical stack where privacy and compliance can coexist. This is not simply combining two technologies but tailoring solutions to the actual pain points of financial institutions. The result is: on-chain transactions can protect sensitive data while providing regulators and financial institutions with the necessary oversight. The information they need to verify can be verified, and the business details that don’t need to be seen remain black boxes.

The underlying logic needed for financial blockchains is fundamentally different from that of general public chains or privacy coins. It requires a form of selective transparency—transparent to regulators, confidential to competitors. This design philosophy may be the true path that financial blockchain should follow.