Confidential payment infrastructure is being tested as a regulatory pathway for stablecoins to settle on-chain, according to Citi's base case from its June 2026 Tokenization 2030 report. The bank projects $5.5 trillion of tokenized assets could move to blockchain networks once auditable privacy mechanisms pass regulatory review.
Regulatory certainty around privacy—the ability to prove transactions have occurred without exposing settlement details to the public ledger—has emerged as a constraint on institutional adoption of on-chain stablecoins. Citi's figure applies to tokenized assets broadly, not payments alone, and represents the bank's base case rather than a floor estimate.
Toss, a Korean fintech firm, is running a proof of concept for a Korean won stablecoin using privacy infrastructure. The company signed a memorandum of understanding with Optimism on July 8, 2026, to test the stack over three months using Privacy Boost, a confidential transactions protocol.
Auditable privacy systems allow counterparties and regulators to verify transaction legitimacy and compliance without publishing transaction amounts or counterparty identities to the blockchain. The mechanism sits between full transparency and complete opacity, a design constraint that has kept institutional capital on private blockchains or traditional settlement systems.
The timing of Toss's test aligns with broader movement among major financial institutions toward on-chain settlement infrastructure. Citi's projection hinges on regulators accepting auditable privacy as sufficient for anti-money-laundering and know-your-customer compliance. No U.S. or European regulator has yet issued explicit guidance on whether such systems satisfy existing requirements.
