Zac Williamson, co-founder of blockchain project Aztec, said private smart contracts could let regulated assets such as mortgages and bonds connect to decentralized finance (DeFi) while concealing sensitive holder information.
In a Bankless episode published Nov. 3, Williamson said privacy alone is unlikely to draw users to a financial product. When similar services are available, he said, consumers often prioritize lower costs and easier use, even when a product collects more of their data. That trade-off leaves a market gap for assets whose legal rules require identity checks.
Williamson said trading assets such as mortgages and bonds generally requires identifying holders and meeting applicable compliance requirements. He said tokenized assets often depend on custodians to manage personal and account records, a setup that can make it harder for separate DeFi applications to use the assets. Applications may need to establish their own arrangements with those data holders, adding another step to integration.
Williamson's proposed design would let a smart contract confirm details such as credentials, credit scores or passport signatures without sharing the underlying information with the application. He described Aztec as lacking viewing keys at the protocol level, meaning the network itself has no such key to open transaction records. Developers could still add viewing keys within individual applications, he said, separating app-level access controls from access granted by the network.
He said institutional activity is moving to proprietary networks and some layer-2 systems to run compliance checks. Williamson argued that keeping assets and users inside separate platforms makes it harder for protocols to connect and share liquidity, a feature he sees as central to DeFi. He pointed to DeFi's earlier ability to combine protocols as a precedent for an open system.
Williamson identified two obstacles: the complexity of zero-knowledge proofs, a cryptographic method for proving a fact without exposing the data, and demands from existing providers for transaction viewing access to monitor compliance. Outside firms could help handle the processing load, he said, but could also assume monitoring duties. Working with established providers may still require giving them access to transaction data, according to Williamson.
