EthSystems, a startup spun out from the Ethereum Foundation earlier this month, is betting that privacy, not scalability, is the biggest hurdle stopping institutions from moving financial activity onto public blockchains.
The company, created within the Ethereum Foundation's institutional privacy working group, is building privacy infrastructure for banks, asset managers, and governments looking to use Ethereum for tokenized assets, stablecoins, and other financial applications.
Rather than building an entirely new blockchain, EthSystems helps institutions deploy privacy technologies that keep sensitive transaction data confidential while settling on Ethereum.
"Almost every financial institution requires a certain level of privacy," co-founder Mo Jalil said in an interview. "Privacy does not necessarily mean something has to be anonymous or hidden. It's just needing control over who sees what, when, and how."
EthSystems is far from the only company specializing in institutional privacy. Firms like the Canton Network, backed by major financial institutions including Goldman Sachs, BNP Paribas, and DTCC, as well as native Ethereum privacy protocols like Aztec and Miden, are also building infrastructure aimed at enabling confidential transactions for enterprises.
The startup's differentiator is its plan to advise institutions on privacy architecture, build custom infrastructure where needed, and publish open-source research on institutional blockchain adoption. The company says it does not aim to compete with existing privacy projects but instead work alongside them, recommending and integrating technologies based on client needs.
"We don't have one single product, we have several, and we will work with the existing privacy ecosystem rather than rebuilding the entire privacy stack," Jalil said.
EthSystems began as one of several organizations spun out from the Ethereum Foundation amid a broader restructuring aimed at distributing responsibilities previously handled inside the nonprofit. Unlike subsidiaries EthLabs, which focuses on protocol development, and Ethereum Institutional, which coordinates enterprise engagement, EthSystems handles privacy and cryptography for institutional users.
The decision to become a commercial company was driven by demand the team was already encountering within the foundation.
"We were building these experimental proof of concepts, and then institutions would ask, 'Can we pay your team to launch this into production?'" Jalil said. "Every time, I'd have to say, 'We don't do that.'"
Operating as a commercial business, he said, makes it easier to both fund the company's work and participate in the procurement processes at major financial institutions.
"It seemed like a more sustainable model," Jalil said. "You can get financial institutions to fund your vision by doing the work they need and charging them for it."
The company said demand from institutions has changed markedly over the past year. Initial conversations were mostly with innovation teams experimenting with blockchain technology. Today, discussions increasingly involve business units responsible for managing trading desks and asset management.
"Their experimental phase is over. Now, real people want to put assets on-chain and move real financial flows onto it."
This shift reinforces EthSystems' core thesis: institutions no longer need to be convinced that blockchain has potential—they need infrastructure that meets regulatory and privacy requirements.
"The only way to bridge the gap between public blockchains and institutional control is through cryptography and privacy," Jalil said.
