Aptos says its new privacy coin seeks to fix one of crypto’s biggest trade-offs

Aptos Labs founding engineer Sherry Xiao said Aptos’ newly introduced privacy coin could fix a long-standing trade-off between protecting user privacy and preserving transparency for compliance.

“Confidential $APT” launched on the Aptos mainnet on Friday after a governance proposal to integrate the privacy feature passed in a near-unanimous vote. It uses zero-knowledge proofs to conceal token balances and transfer amounts while still enabling transactions to be verified.

Source: Aptos

While blockchains offer a level of transparency that most traditional ledgers do not, the lack of privacy has slowed individual and enterprise adoption due to the risk of exposing financially sensitive information.

In an interview with Cointelegraph, Xiao said Confidential $APT — which is pegged 1:1 to Aptos ($APT) — reduces the risks of users being subjected to wallet profiling or targeted scams:

“Portfolio sniping, social pressure from visible holdings, personal safety — these are pain points people feel today.”

Confidential $APT can conceal salaries, business strategies

Xiao said the Confidential $APT token solves an active problem in the workplace, too.

“If a company runs payroll on-chain with visible amounts, every employee’s salary is permanently public — to coworkers, competitors, recruiters, everyone,” she said.

“Same with treasury moves, settlement flows, trading strategies,” Xiao said, noting that blockchain’s lack of privacy is an “operational dealbreaker” for many businesses.

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However, “Confidential balances solve that directly,” Xiao said.

Backdoor function can be enabled for investigation purposes

Xiao said Confidential $APT can still comply with know-your-customer and anti-money laundering checks in the event of an investigation or subpoena through the use of auditor keys.

Auditor keys may only be authorized following a successful onchain governance vote, she noted:

“This approach allows relevant parties to access information like transfer amounts for investigations, while preserving privacy as the default for users.”

While Confidential $APT conceals token balances and transfer amounts, the wallet addresses involved and transaction verification remain visible, distinguishing it from other privacy-focused cryptocurrencies like Monero (XMR).

Xiao said she expects individuals to adopt Confidential $APT faster than businesses, noting that integrating the privacy coin into the tax reporting pipeline and compliance will take some time.

That said, “If Confidential $APT runs on mainnet for six months with solid volume and no issues, that’s the proof point that shortens the enterprise sales cycle,” Xiao added.