COTI Expands Privacy Infrastructure to Target $30 Trillion Tokenized Asset Market

Privacy is increasingly being recognized as a key competitive advantage in the crypto space. Ali Yahya, a general partner at a16z crypto, has emphasized the importance of privacy as a foundational element for the future of blockchain-based finance. He argues that privacy is not just a feature but a critical design principle that many blockchains still overlook. As the industry evolves, this oversight could hinder broader adoption and long-term value creation.

The demand for credible confidentiality is rising across the market. Privacy-focused blockchains are gaining traction, with some emerging as potential leaders in the next phase of crypto market growth. This trend is particularly relevant as real-world use cases demand secure cross-chain data sharing and the masking of sensitive information. Without these capabilities, many current blockchains may struggle to meet the privacy needs of global finance.

Developments in the privacy space are not limited to a16z's vision. COTI, a privacy-layer pioneer, has announced a 2026 roadmap centered around expanding its Privacy-on-Demand infrastructure across multiple blockchains. The company's innovations, such as Garbled Circuits and PriveX, are helping to establish a new model for privacy-preserving DeFi trading. These advancements aim to address risks like front-running and slippage while enabling institutional-grade privacy for real-world assets.

The Road to Institutional Adoption

As privacy-focused protocols mature, institutional adoption is accelerating. COTI has collaborated with governments and central banks to integrate its privacy infrastructure into enterprise-grade systems. This shift reflects a broader industry trend, where blockchain solutions are being evaluated not just for efficiency but for their ability to meet stringent privacy and compliance requirements. For traditional financial institutions, privacy is becoming a bridge to blockchain adoption, particularly in tokenized asset markets.

COTI's recent expansion into multichain privacy and private DeFi has also drawn attention from major players in the crypto space. The company plans to target the $30 trillion tokenized asset market in 2026, emphasizing the potential for privacy-enabled RWAs. This strategy aligns with a16z's assertion that privacy will be a core moat for crypto projects moving forward. By offering scalable, customizable privacy solutions, COTI is positioning itself to serve both decentralized applications and traditional finance.

Policy and Legal Developments

While technical advancements drive the privacy narrative, policy and legal developments are also shaping the landscape. In Arizona, state Senator Wendy Rogers has proposed legislation to exempt virtual currency from property taxes and to bar local governments from taxing blockchain node operators. These measures aim to make Arizona more attractive for blockchain innovation, though they would require voter approval in 2026. The proposals highlight the growing political interest in crypto-friendly policies, particularly in states seeking to establish themselves as hubs for digital asset development.

At the federal level, Wyoming Senator Cynthia Lummis has introduced a draft bill proposing a de minimis exemption for small digital asset transactions. Meanwhile, states like New York and Ohio have also experimented with different approaches to crypto taxation, ranging from excise taxes to transaction exemptions. These policy debates reflect the broader challenge of balancing innovation with regulatory oversight, as lawmakers attempt to define the role of privacy in the evolving crypto ecosystem.

Risks to the Outlook

Despite the growing emphasis on privacy, challenges remain. Security vulnerabilities and governance issues continue to plague the crypto space. For example, the Balancer protocol recently suffered a $128 million exploit, prompting legal action from the Rosen Law Firm. Such incidents underscore the need for robust security frameworks and transparent governance practices, particularly as privacy-focused projects handle sensitive financial data.

Additionally, the technical hurdles of cross-chain privacy interoperability remain significant. While projects like COTI and DAGCHAIN are making progress, achieving seamless, secure data sharing across multiple blockchains is a complex task. The success of privacy-focused blockchains will depend not only on their ability to protect user data but also on their capacity to integrate with existing financial systems and regulatory frameworks.

As the market continues to evolve, the role of privacy in crypto will likely become more pronounced. Investors and developers are increasingly recognizing that privacy is not just a technical feature but a strategic advantage. For crypto projects aiming to scale and sustain long-term value, building robust privacy infrastructure will be essential.