If stablecoins aren’t private, nothing is | Opinion

Stablecoins will soon become the internet’s native form of everyday money and are arguably the most successful form of crypto adoption to date. They’re fast, global, programmable, and settlement-final in one click. It’s no surprise that in 2024, they moved more value than Visa. But they’re also a ticking privacy time bomb.

Financial transactions reveal more about us than search history ever could. They expose what we value, who we rely on, and where we’re vulnerable. And if stablecoins scale in their current form, that data becomes fair game for everyone: competitors, bots, insurance adjusters, or even criminals. 

Nobody wants this, and that’s exactly where we’re headed if privacy isn’t built into stablecoins from the ground up. Maybe a little thought experiment would help explain why confidential, compliant stablecoins are urgently needed.

Insurance redlining via on-chain spend

Imagine refilling a prescription with one of today’s stablecoins. Public stablecoins mean those transactions are visible to anyone, including your health insurer.

Insurers already use off-chain data to profile customers: shopping habits, zip codes, browser cookies. Now imagine what they’d do with perfect on-chain visibility. If your stablecoin wallet shows regular payments to a cancer center or a rehab clinic, you may face higher premiums or find yourself uninsurable altogether.

What’s needed is transaction confidentiality by default, with selective disclosure only for those authorized to see it.

B2B espionage as a service

Now imagine you’re a mid-sized hardware startup, buying parts from ten suppliers. You pay them all in stablecoins onchain. Your competitor doesn’t need to hire an investigator; they just run a blockchain scraper.

They’ll see your suppliers, volumes, and payment timing. They might spot a sudden ramp in orders and infer a product launch. Or identify a supplier and undercut your pricing.

This is the logical result of radical transparency for businesses. Corporate procurement is a goldmine of competitive intel, and on-chain B2B payments turn your operations into public strategy leaks.

Confidential stablecoins would allow for transfers where amounts and counterparties are hidden but are still auditable to regulators and tax authorities.

Predatory terms for small businesses

Let’s zoom in on the little guy, now. Suppose a bakery uses stablecoins to pay rent and buy flour. A large buyer notices they’ve had fewer deposits this month, so they deduce that their balances are low and the bakery is cash-starved.

With public stablecoins, small businesses lose their ability to negotiate from strength. The large buyer can use this publicly available information as leverage in a negotiation.

Privacy helps restore balance here. Shielded accounts prevent counterparties from peeking into your books unless you invite them. That’s how every normal business relationship already works. Confidential stablecoins just bring that logic to the internet age.

Remittances as extortion beacons

A migrant worker sends $300 in stablecoins to his family. The transaction is fast and cheap, but now it’s public. Cartels scrape blockchain data, and a week later, someone knocks on their family’s door.

This is happening now with off-chain remittances and WhatsApp. Public stablecoin flows make it worse because they’re fully traceable and impossible to erase.

Remittances should not be a source of personal risk, and confidential transfers solve this. A remittance receipt can still be validated by a money transfer operator, or without being readable to a gang leader with a laptop.

Bots front-running your paycheck

If you’re paid in stablecoins on the first of the month, MEV bots already have you on a calendar.

These bots monitor the mempool, and they see your employer’s stablecoin swap coming, front-run it, and make sure your paycheck buys slightly less. Repeat that monthly, you’re effectively paying an MEV tax.

In 2025, Coinbase lost over $300,000 when MEV bots exploited a misconfigured treasury contract. Sandwich bots earned millions exploiting predictable flows.

The fix is to encrypt the transaction path. Send your stablecoin swap through a private execution layer or an encrypted relay.

Privacy isn’t the enemy of compliance

Perhaps the most important takeaway in all of these scenarios is that privacy and compliance are not mutually exclusive. Zero-knowledge proofs, trusted execution environments, and encrypted audit logs already allow for:

• Selective disclosure to regulators
• Proofs of KYC, AML, and tax compliance
• Jurisdictional controls like geo-fencing

We can have private execution of stablecoin transfers with built-in compliance hooks. There’s really no need to leak your salary, your suppliers, or your family’s remittances.

Confidential stablecoins are the path forward

The future of finance can’t be public-by-default. It must be an environment where both individuals and institutions get to share what’s necessary to prove compliance, meet audit thresholds, respect local laws, and nothing more.

Stablecoins are already the backbone of crypto adoption, and they are too important to fail the privacy test. Without privacy, they become an even larger threat than web2’s data surveillance problems ever were.

We used to worry about Big Brother. Without confidential stablecoins, everyone becomes Big Brother. Confidential, compliant stablecoins are how we avoid that future.