In the blockchain world, we are long accustomed to hearing the phrases "transparency and decentralization." But anyone who has worked in finance knows that excessive transparency can actually become the biggest barrier for institutional entry.

Imagine which bank or hedge fund would expose all their large holdings and trading strategies on a public blockchain? That’s simply unrealistic. This is the core contradiction in the current RWA (Real-World Asset on-chain) track—the ideal of tokenization is beautiful, but compliance and privacy protection can never be fully balanced.

Recently, I’ve been following some projects that aim to solve this problem. An interesting approach is that instead of sacrificing privacy to meet compliance, it’s better to integrate both needs directly at the protocol layer. For example, through zero-knowledge proof technology, asset issuers can verify whether participants have passed necessary audits without revealing their financial information to the entire network. This is called "selective disclosure"—meeting regulatory requirements while protecting commercial privacy.

From a technical standpoint, this requires a self-developed virtual machine capable of handling complex financial contract privacy verification, enabling fast execution of computations while safeguarding privacy. In simple terms, it’s about making financial institutions willing to go on-chain and giving auditors peace of mind.

Currently, RWA projects are indeed very popular, but most are still at the stage of simple digitization. True deep transformation must address two issues: how to protect asset privacy, and how to ensure on-chain behavior automatically complies with existing legal frameworks. Once these two questions are answered, tokenized securities and compliant securitized assets can truly move from concept to implementation.