- Stellar Development Foundation CEO Denelle Dixon says banks have stayed away from blockchains because most chains can’t offer privacy by design.
- She says privacy and openness are a spectrum, and blockchain networks must find the right balance or risk losing institutional adoption.
Digital assets have gone mainstream, with tens of billion-dollar giants owning cryptocurrencies or a related product. However, the use of blockchain is still limited, and according to the CEO of the Stellar Development Foundation, the main barrier is a lack of privacy.
In a new blog post, Denelle Dixon has outlined the challenge most blockchains face: balancing privacy and transparency. The original vision for blockchain technology was to design a system that deters bad actors by making transactions immutable and visible. While this may work for retail use, institutional users would never publish their inner workings on a public ledger.
Dixon says she has dealt with dozens of banks, and they have no concerns about consumer data, fees, speed or even consumer privacy. What they care most about is protecting their inner workings, the competitive intelligence that determines their position in the marketplace. In the existing system, there are several guardrails that prevent access to the information of other users, from custodians and broker-dealers to clearing houses.
Dixon noted:
But the very thing that makes this pitch convincing, the transparent ledger, is the very thing that undoes the privacy protections that institutions already have.
That’s the tension. And until the problem is resolved, no institution will migrate its entire portfolio to the chain. Point.
Stellar CEO: Blockchains must balance privacy and transparency
Blockchain was built to ensure that no bad actors can operate in the shadows, not “so that one big bank can see what another is doing on a Tuesday afternoon,” says Dixon. Institutions that request privacy are not intended to hide their illegal activities, but to protect their data from access by rivals. If a bank knew what deposits were coming in for their rival, or for their most active customers, they would target their rival’s weakest points and gain an advantage.
Blockchain transparency is designed so that bad actors cannot hide. It was never designed so that one bank can see what another bank is doing on a Tuesday afternoon. That distinction is important.
My latest news on the real privacy conversation holding back institutional adoption.…
— Denelle Dixon (@DenelleDixon) March 9, 2026
Dixon believes that privacy and transparency are not binary; they exist on a spectrum, and blockchain networks must find the right balance between the two.
To address this balance, these networks must decide what transaction data protects the integrity of the blockchain, what audit access regulators require, how to verify asset provenance without exposing flow patterns, and how to demonstrate system integrity without making every transaction public, she says.
Dixon says Stellar achieves this balance through a technical implementation with a transparent base layer and configurable privacy at the application layer.
One of the ways the network improves privacy is through Stellar Private Payments, a framework that enables confidential transfers using zero-knowledge proofs. As CNF reported, SPP was open sourced last month. With SPP, users deposit tokens into a privacy pool and any transfers within this pool are hidden. The network uses the ZK receipts to verify the validity of the transactions without revealing the identity of the sender/recipient or their balance.
Dixon added:
If we can define the right parameters by preserving the benefits of blockchain while implementing the privacy protections that institutions actually need, we can ultimately build something better than what exists today.