EthSystems Spins Out of the Foundation: Privacy, Not Speed, Is What Banks Actually Want

The Ethereum Foundation just spawned another spinout. This time it's called EthSystems, launched July 14, and it's staffed with people who spent the past year thinking about how to get actual banks onto the public Ethereum network.

Here's the contrarian bit: they don't think scalability is the problem. Privacy is. Mo Jalil, the CEO, along with co-founders Oskar Thorén and Aaryamann Challani, all came straight out of the Foundation's Institutional Privacy Task Force. Their central argument is that confidentiality—not speed, not throughput—is the biggest barrier keeping real financial activity off public Ethereum.

The pitch is straightforward. Banks need to control who sees what. A regulator might get full visibility into a transaction. Counterparties see only their slice. Nobody needs to know everything. EthSystems calls this "selective disclosure," and they've built tools around it: confidential settlement, private bonds, identity solutions. All of it settles on mainnet Ethereum itself, not some walled-off permissioned sidechain.

Jalil put it directly in his interview: "Almost every single financial institution requires some level of confidentiality." He was careful to clarify—confidentiality doesn't mean anonymous or hidden. It means controls. Who sees what, when, and how. That's the product.

They're not alone in this space. Canton Network (backed by Goldman Sachs, BNP Paribas, and DTCC) is doing similar work. So are Ethereum-native protocols like Aztec and Miden. But EthSystems is positioning itself as a hands-on service provider. They do architecture advisory, implementation workshops, full production builds. Everything they produce—maps, prototypes, frameworks—stays publicly available. That's a deliberate positioning choice.

The funding reveals something interesting too. Joe Lubin, Ethereum's co-founder and ConsenSys head, backed them. So did Bitmine Immersion Technologies and Sharplink. Both Bitmine and Sharplink hold substantial Ethereum positions, which suggests they're betting real money on this thesis. Tom Lee, Bitmine's Chairman, called it ambitious: the next $100 trillion in global assets will need exactly this kind of privacy infrastructure.

The timing isn't accidental. Ethereum is already holding $16 billion in tokenized real-world assets and $159 billion in stablecoins. The on-chain appetite for institutional-grade tooling is there. The RWA narrative keeps building.

Worth noting: they structured themselves as a for-profit, not as a nonprofit under the Foundation umbrella. The founders explained that serving institutional clients demands a commercial counterparty. You can't do production work with a nonprofit. That's pragmatic.

This spinout joins EthLabs and Ethereum Institutional as the Foundation restructures its approach to protocol development versus institutional adoption. Different entities, cleaner separation of concerns.

The bet here is clear: privacy tooling is where the commercial opportunity lives in institutional blockchain adoption. Not hype. Not price talk. Infrastructure that actually lets banks put billions on-chain without exposing their book. That's a real problem to solve.

Source & further reading:

• Ethereum startup EthSystems bets privacy is key to getting banks on public blockchains — CoinDesk
• Coinbase wants to be Canada’s ‘everything exchange,’ but says clearer rules are needed first — CoinDesk
• 'Anything remotely dovish' from Fed could be good for bitcoin, says analyst — CoinDesk
• Ondo drops tokenized asset blockchain plans for private, high-speed trading network — CoinDesk
• Wall Street veteran Don Wilson says regulators are getting perps all wrong — CoinDesk