On the path of exploring how blockchain empowers finance, we often get stuck in a dilemma: on one side is DeFi's completely transparent logic, with transaction records fully visible; on the other side is the fully anonymous world of privacy coins, where regulation has no foothold. But for regulated institutions like banks and funds, neither path is feasible. What they truly need is to find that delicate balance point—"compliance auditing" and "business privacy"—that allows them to meet regulatory scrutiny while protecting client and transaction confidentiality.

Founded in 2018, Dusk Network is attempting to solve this problem. Rather than being a fixed product, it is better described as a modular toolkit—institutions can assemble their own blockchain solutions like building blocks, tailored to their needs.

**The Real Dilemma of Cross-Border Payments**

Imagine a scenario: a multinational bank needs to process large cross-border remittances. There are two main challenges. First, anti-money laundering (AML) audit requirements mandate that the bank must be able to prove the source and destination of funds to regulators—this is a hard bottom line. Second, the bank does not want competitors to see its fund flows and client lists. Combining these two needs, traditional blockchain architectures hit a wall.

With Dusk’s design, banks can build a private payment channel. The core technology is zero-knowledge proofs—simply put, it allows proving to regulators "I know certain information" without revealing that information itself. Transaction details are encrypted and protected; when regulatory nodes need to review, the bank can selectively disclose only the necessary metadata for verification. This "programmable privacy" capability makes compliance an inherent feature of the protocol itself, rather than an external constraint.

**New Opportunities in Real Asset Tokenization**

Another highly imaginative application is the on-chain tokenization of real-world assets (RWA). For example, a real estate investment fund might fragment a commercial building into tokens and sell them to investors worldwide. This scenario involves two major technical challenges.

First, privacy protection—investors’ identities and holdings must not be exposed. Who bought how much, and who doesn’t want others to know. If everything is transparent on-chain, investors would naturally resist. Second, tax compliance—different countries have vastly different tax laws. The US has its taxes, Europe has its own, and a global fund needs to automatically generate tax reports compliant with each jurisdiction. This is already complicated in traditional finance; without good tools, it becomes even messier on-chain.

Dusk’s modular approach can handle this complexity. By combining smart contracts and privacy protocols, the fund can implement on-chain: verified but undisclosed investor identities, encrypted holdings that can be authorized for querying, and automatic generation of country-specific tax documents. This approach satisfies global compliance while safeguarding participant privacy.

**Why This Matters**

Traditional financial institutions entering blockchain are not aiming for complete revolution. They want to leverage new technology within existing regulatory frameworks to improve efficiency, reduce costs, and expand possibilities. This represents a huge market opportunity—the daily flow of traditional financial assets globally is thousands of times larger than the cryptocurrency market.

This also explains why, in recent years, the integration of privacy technology with compliance design has become a key direction for Web3 infrastructure. Not all applications require full decentralization, nor do all need complete transparency. Many practical needs lie somewhere in between—requiring enough transparency to meet regulators, while maintaining sufficient privacy to protect commercial interests.