Ethereum News Today: Ethereum's Privacy Push Aims to Attract Institutions by Balancing Anonymity and Compliance

The Ethereum Foundation has launched the Kohaku roadmap, a privacy-focused initiative aimed at enhancing wallet security and reducing reliance on centralized services. The project, announced by Ethereum Foundation coordinator Nicolas Consigny, introduces a modular framework designed for developers and advanced users. Kohaku includes a software development kit (SDK) for secure wallet functions and a reference wallet built on the Ambire platform, initially available as a browser extension. Key features under development include private transaction sending and receiving, IP address obfuscation, and peer-to-peer (P2P) transaction broadcasting that bypasses traditional remote procedure call (RPC) servers. The project also incorporates social recovery mechanisms using zero-knowledge proofs (ZK Email) and privacy-preserving identity verification (Anon Aadhaar).

The Kohaku roadmap aligns with the Ethereum Foundation's broader privacy strategy, which includes the formation of a 47-member Privacy Cluster. Coordinated by Igor Barinov, this initiative unifies efforts from the Privacy and Scaling Explorations (PSE) team and expands on existing projects like Semaphore (anonymous signaling) and MACI (private voting). The Privacy Cluster focuses on embedding privacy into Ethereum's protocol layer, targeting features such as confidential identity systems, zero-knowledge infrastructure, and private governance tools. Vitalik Buterin, Ethereum's co-founder, has emphasized privacy as a critical component of blockchain's future, advocating for solutions that balance user anonymity with regulatory compliance.

A central objective of the roadmap is to address surveillance vulnerabilities in blockchain transactions. Current Ethereum wallets often expose metadata through centralized RPC nodes, revealing user activity patterns. Kohaku aims to mitigate this by enabling private reads and writes, where users can interact with decentralized applications (DApps) without leaking transaction details. The initiative also seeks to integrate zero-knowledge proofs (ZKPs) for verifiable identity systems, allowing users to prove eligibility or ownership without disclosing sensitive information. These advancements are expected to support institutional adoption, as financial entities increasingly prioritize data confidentiality under regulations like the EU's GDPR.

The Ethereum Foundation's rebranding of the PSE team to "Privacy Stewards of Ethereum" underscores a strategic shift toward protocol-level privacy solutions. The roadmap outlines short-term goals, including the development of a native Ethereum browser with built-in privacy features and the integration of PlasmaFold, a layer-2 network for confidential token transfers. Long-term plans involve advancing cryptographic research to bring wallet security "as close as possible to the silicon," ensuring device-level protections against data leaks.

Institutional interest in Ethereum's privacy tools is growing, driven by the need for secure, compliant blockchain solutions. The Fusaka 2025 upgrade, scheduled for December 3, 2025, will enhance network scalability by increasing block capacity and improving data availability, addressing a key barrier to large-scale privacy adoption. Analysts note that Ethereum's dominance in stablecoin activity and tokenized assets positions it to lead in institutional use cases if privacy features align with regulatory expectations.

The Privacy Cluster also addresses enterprise requirements through the Institutional Privacy Task Force, which translates compliance needs into technical specifications. This includes developing tools for confidential governance and secure transaction workflows, enabling institutions to leverage Ethereum's transparency while maintaining data privacy. Collaborative projects like Aster, a decentralized exchange using ZKPs to conceal trade details, demonstrate the ecosystem's progress in balancing privacy and transparency.

Ethereum's privacy initiatives face challenges, including regulatory scrutiny of privacy-preserving technologies and competition from other blockchains. However, the foundation's commitment to open-source development and ecosystem-wide collaboration aims to establish privacy as a "first-class property" of Ethereum, aligning with its vision of "digital trust at civilizational scale".

Source: [1] Cointelegraph (https://cointelegraph.com/news/ethereum-devs-unveil-kohaku-wallet-privacy-roadmap)

[2] Analytics Insight (https://www.analyticsinsight.net/ethereum/will-ethereums-2025-privacy-roadmap-help-it-dominate-institutions)

[4] Cryptonews.com (https://cryptonews.com/news/ethereum-foundation-forms-47-member-privacy-cluster-to-make-privacy-first-class-property/)

[5] Coindesk (https://www.coindesk.com/tech/2025/10/09/ethereum-foundation-expands-privacy-push-with-dedicated-research-cluster)

[7] The Block (https://www.theblock.co/post/373951/ethereum-foundation-creates-privacy-cluster)

[9] CryptoTale (https://cryptotale.org/ethereum-foundation-forms-privacy-cluster-for-zk-tech-push/)