Sherry Xiao, founding engineer at Aptos Labs, said that Aptos' new privacy coin may fix a long-standing trade-off between protecting user privacy and maintaining transparency for compliance.
The “Confidential APT” launched on the Aptos mainnet on Friday, following the approval of a governance proposal that integrated the privacy feature, which received almost unanimous approval. The feature uses zero-knowledge proofs to hide token balances and transaction amounts while still allowing transaction verification.
Source: Aptos
While blockchain offers transparency that most traditional ledgers lack, its lack of privacy, potentially exposing sensitive financial information, has slowed adoption by individuals and businesses.
In an interview with Cointelegraph, Xiao stated that the Confidential APT, which is 1:1 pegged to Aptos (APT), can reduce the risk of users encountering wallet profiling or targeted scams:
"Portfolio sniping, the social pressure of visible holdings, and personal safety—these are all pain points that people are truly feeling today."
Confidential APT can hide salary information and business strategies.
Xiao stated that the Confidential APT token also solves a real-world problem in the workplace.
“If a company pays salaries in on-chain visible amounts, then every employee’s salary will be permanently public—colleagues, competitors, recruiters, everyone can see it,” she said.
“The same applies to fund allocation, settlement flow, and transaction strategies,” Xiao said, noting that the lack of privacy in blockchain is “an operational veto” for many companies.
However, Xiao stated, "The Confidential balance can directly resolve this issue."
Backdoor functionality can be enabled for investigative purposes.
Xiao stated that even when an investigation occurs or a subpoena is received, Confidential APT can still satisfy Know Your Customer and Anti-Money Laundering audits through audit keys.
She pointed out that audit keys can only be authorized after a successful on-chain governance vote:
"This approach allows relevant parties to obtain information such as the amount of money transferred during an investigation, while preserving privacy as the user's default setting."
While Confidential APT hides token balances and transaction amounts, the associated wallet addresses and transaction verifications remain visible, distinguishing it from other privacy-focused cryptocurrencies such as Monero (XMR).
Xiao stated that she expects individual users to adopt Confidential APT faster than businesses, and noted that it will take some time to integrate this privacy coin into tax filing processes and compliance systems.
However, she added, "If Confidential APT runs on the mainnet for six months with solid trading volume and no issues, that would be proof of shortening the sales cycle for businesses."
