TL;DR
- Brian Armstrong revealed that Coinbase is working on private stablecoin transactions on Base.
- The feature will seek a balance between user privacy and regulatory compliance (KYC).
- The technology would be based on the privacy platform Iron Fish, acquired by Coinbase this year.
Brian Armstrong, the CEO of Coinbase, reported that the company is close to enabling private stablecoin transactions on Base, its Layer 2 network on Ethereum. This development represents a significant step towards greater privacy in blockchain transactions, a historically contentious topic in the industry.
In a post shared on his X account, Armstrong stated: “Base is building private transactions.” The CEO directly linked this mission to Coinbase’s acquisition of the crypto privacy platform Iron Fish earlier this year.
The initiative’s objective is clear: to increase user privacy on public blockchains, which are transparent by design, using zero-knowledge proofs while maintaining regulatory compliance.
The news generated mixed reactions in the crypto community. While many celebrated the move towards greater financial confidentiality, others expressed skepticism, questioning whether Coinbase’s new privacy system would inevitably include Know Your Customer (KYC) checks that would ultimately limit user anonymity.
Armstrong did not address these specific concerns and limited himself to saying that more details would be shared soon.
The Balance Between Privacy and Regulatory Compliance
Privacy in the crypto space remains a battlefield. On one hand, users consider it vital for protecting their financial data and preventing targeted attacks. On the other hand, global regulators often see it as a potential avenue for illicit activities, terrorist financing, and money laundering.
This tension has resulted in crackdowns on privacy-focused projects. The most notorious cases include the arrest and prosecution of Tornado Cash developers Alexey Pertsev and Roman Storm, as well as Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill.
Despite Armstrong’s comments, it is very likely that the future private stablecoin transaction feature on Base will not be completely opaque. The model is expected to follow Iron Fish’s current implementation, which uses “view keys.” This system allows users to verify transactions privately but also gives them the option to disclose information to authorities when necessary.
This approach seeks a difficult balance: allowing users to hide their activity from the general public while providing read-only access to tax agencies or compliance bodies if the situation requires it. In this way, Coinbase would attempt to offer private stablecoin transactions on Base without entering into direct conflict with the regulatory environment.
