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ZK Proofs Draw Fire as Canton Disputes Their Role in Institutional Finance

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR:

  • Canton’s anti-ZK argument rests on a hidden assumption that no backup system exists to catch failures.
  • Canton’s trust-only model has no cryptographic layer, leaving compromised keys to spread damage silently.
  • Prividium deploys three independent defense layers, keeping any breach contained to a single institution’s chain.
  • DAML faces the same maturity concerns Canton raises about ZK proofs, but with far fewer security eyes watching.

Zero-knowledge proofs are at the center of a growing debate in institutional finance. Canton Network founders have argued that ZK proofs pose unacceptable risks for mission-critical financial systems.

They have raised this case with buyers and regulators, both publicly and privately. A public response from ZK researcher Alex challenges that argument directly.

The rebuttal compares the architectural approaches of Canton and Prividium.

Canton’s Risk Case and the Assumption It Rests On

Canton’s argument against ZK proofs centers on their complexity. Bugs in such systems may go undetected because the underlying data stays private.

If a flaw spreads silently, it could create systemic risk across financial networks. The concern is genuine, but the logic that follows contains a gap.

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The reasoning assumes ZK proofs are the only line of defense in a system. Alex draws a parallel to aviation, nuclear controls, and medical devices.

Each of those is complex, mission-critical, and capable of catastrophic failure. None were abandoned for that reason—they operate through redundancy and containment, not the absence of risk.

In a post on X, @gluk64 framed it as a broader pattern. Any complex, mission-critical technology that can fail catastrophically would fail Canton’s test.

The hidden assumption doing all the work is that no backup system exists. That assumption, not the technology itself, is what creates systemic danger.

Canton’s own architecture illustrates this point. Its privacy model relies solely on trusted operators to segregate data between participants. There is no cryptographic verification layer in place.

If operator keys are compromised, the manipulated state propagates silently across opaque chains with nothing to catch it.

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Prividium’s Layered Defense and the Open Standards Question

Prividium builds its model on three independent layers of defense. Institutional partners operate nodes within their own regulated environments.

Zero-knowledge proofs then add a cryptographic verification layer above operational security. As proof systems mature, multiple independent provers can verify the same computation. A flaw in one implementation then gets caught by another.

Containment is built into the architecture by design. Each Prividium instance is a separate chain operated by a single institution.

Inter-chain interactions go through accounting mechanisms enforced independently by participating institutions or on-chain. Even a combined attack on internal IT and a ZKP bug stays confined to that one chain.

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The open standards question adds another layer to the comparison. ZKsync’s move toward full EVM equivalence reflects the principle that deviating from open standards widens the attack surface.

Ethereum’s infrastructure has faced more than a decade of adversarial testing with hundreds of billions at stake. That process built stronger audit standards, formal verification tools, and hardened design patterns.

Canton’s maturity concerns about ZK proofs apply equally to DAML, its proprietary smart contract language. DAML operates within a closed ecosystem with far fewer developers and security researchers watching.

Every vulnerability cycle Ethereum worked through still lies ahead for DAML. The architecture with the longest track record under the harshest conditions carries the least risk.

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Crypto Week Ahead

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Sam Bankman-Fried files for new trial over FTX fraud charges

The final week of March is shaping up to be a volatile one, with the FTX Recovery Trust set to distribute $2.2 billion to creditors on Tuesday and the key U.S. monthly nonfarm payrolls statistic due Friday, when many equity markets worldwide will be closed for Good Friday.

The war in the Middle East, now in its fifth week, is also critical. The conflict has disrupted major energy infrastructure and transport in the region, in turn leading to higher inflation expectations and a meaningful shift in monetary policy expectations, Luke Deans, a senior research associate at Bitwise, told CoinDesk.

“Bitcoin, a highly reflexive and liquidity-sensitive asset, typically responds earlier to shifts in risk appetite and has repriced lower since October 2025,” Deans said. “This suggests that digital assets began reflecting tighter financial conditions ahead of many traditional risk assets.”

Global macro forces, he added, remain the primary drivers of risk sentiment. While liquidity will certainly play a role, the market backdrop remains fragile given the ongoing geopolitical uncertainty.

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What to Watch

(All times ET)

  • Crypto
  • Macro
    • March 30, 9:30 p.m.: China NBS Manufacturing PMI for March (Prev. 49.0); Non-Manufacturing PMI (Prev. 49.5)
    • March 31, 5:00 a.m.: Eurozone Inflation Rate YoY Flash for March (Prev. 1.9%); Core (Prev. 2.4%)
    • March 31, 9:00 a.m.: U.S. S&P/Case-Shiller Composite-20 Home Price Index YoY for January (Prev. 1.4%)
    • March 31, 9:45 a.m.: U.S. Chicago PMI for March (Prev. 57.7)
    • March 31, 10:00 a.m.: U.S. Conference Board Consumer Confidence for March (Prev. 91.2)
    • March 31, 10:00 a.m.: U.S. JOLTS job openings for February (Prev. 6.946M)
    • March 31, 07:50 p.m.: Japan Tankan Large Manufacturing Index for Q1 (Prev. 15)
    • April 1, 8:15 a.m.: U.S. ADP Employment Change for March (Prev. 63K)
    • April 1, 10:00 a.m.: U.S. ISM Manufacturing PMI for March (Prev. 52.4)
    • April 2, 8:30 a.m.: U.S. Initial Jobless Claims for week ending March 28 (Prev. 210K)
    • April 3, 8:30 a.m.: U.S. Nonfarm Payrolls for March est. 48K (Prev. -92K)
    • April 3, 8:30 a.m.: U.S. Unemployment Rate for March est. 4.5% (Prev. 4.4%)
    • April 3, 10:00 a.m.: U.S. ISM Services PMI for March (Prev. 56.1)
  • Earnings (Estimates based on FactSet data)
    • March 30: Nano Labs (NA), pre-market

Token Events

  • Governance Votes & Calls
    • Stake DAO CRV and BAL are voting on their bi-weekly gauge to allocate CRV and BAL inflation across various liquidity pools. Voting ends March 31.
    • SuperRare DAO is voting to consolidate its treasury management under the RareDAO Foundation by migrating remaining balances and officially concluding its legacy Network Engagement and Grants programs. Voting ends March 31.
    • Aventus DAO is voting to simplify AVT emissions to a flat daily rate, increase the node staking requirement, and replace ongoing fees with an upfront appchain token allocation. Voting ends March 31.
    • Unlock DAO is voting to transfer 3 ETH to its Base multisig to swap for USDC to cover current and future operational expenses. Voting ends April 2.
    • Aavegotchi DAO is voting to elect nine multi-sig signers, maintain a 5-of-9 signature threshold, and set their quarterly compensation at $1,000 paid in GHST. Voting ends April 2.
    • Arbitrum DAO is voting across two proposals to transition its Code of Conduct and Procedures into living documents managed by OpCo, and to upgrade to ArbOS 60 Elara. Voting ends April 2.
    • SSV Network DAO is voting across two proposals to integrate ENS names for core protocol contracts to enhance security against phishing, and to establish a soft fee floor for public operators to ensure economic sustainability. Voting ends April 3.
    • Lisk DAO is voting to test the Degov.ai governance platform ahead of Tally’s shutdown by executing a 0 LSK transfer. Voting ends April 7.
  • Unlocks
    • April 1: to unlock 1.10% of its circulating supply worth $38.29 million.
    • April 2: Ethena (ENA) to unlock 2.18% of its circulating supply worth $16.05 million.
    • April 6: Hyperliquid (HYPE) to unlock 2.66% of its circulating supply worth $379.31 million.
  • Token Launches
    • March 30: BASED token generation event to occur.
    • March 31: edgeX (EDGE) token generation event to occur.
    • March 31: WorldLand (WL) to be listed on KuCoin, Gate, and others.
    • April 1: Orexn (OXN) enters a phased exchange listing period after the token generation event.

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Aave launches on OKX’s X Layer to expand on-chain lending access

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Aave launches on OKX’s X Layer to expand on-chain lending access

Decentralized lending protocol Aave has officially launched on Ethereum layer 2 X Layer.

Summary

  • Aave has launched on X Layer, enabling OKX Wallet users to lend, borrow, and earn yield directly on the network without bridging assets.
  • X Layer, developed by OKX, has seen limited growth so far, with about $25 million in total value locked.

According to the official announcement, the launch will allow OKX Wallet users and DeFi participants to directly supply assets, borrow against collateral, and earn yield on the network without having to use a separate wallet or bridge assets across chains.

X Layer was developed by OKX and launched in 2024, but network growth has been relatively slow so far, with the chain holding only about $25 million in total value locked as of press time.

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Onboarding Aave could significantly strengthen liquidity and expand the network’s DeFi capabilities.

“With a multi-year track record across more than a dozen blockchain networks and a 60% market share of DeFi lending, Aave is the largest and most trusted onchain lending network, with over $46 billion in supply & borrow. Its arrival on X Layer brings that same battle-tested infrastructure to OKX’s L2 ecosystem, permissionless, non-custodial, and accessible directly from OKX Wallet,” OKX said.

As part of the expansion, users can supply assets including USDT0, USDG, GHO, xBTC, xETH, xSOL, xBETH, and xOKSOL to earn yield that compounds automatically while retaining custody of their tokens.

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Further, users will be able to borrow assets such as USDT0, USDG, GHO, xBTC, xETH, and xSOL against their collateral without any credit check or intermediary.

To access the service, OKX Wallet users just need to open the wallet, navigate to Aave through the DApps section, and connect to the X Layer network.

The latest expansion follows the launch of Orbit, a social trading platform that the crypto exchange introduced earlier this month.

As previously covered, Orbit is designed to combine social media-style interaction with trading tools, allowing users to share strategies, discuss market developments, and follow experienced traders in real time.

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Around the same time, OKX disclosed a strategic investment from Intercontinental Exchange, with the deal set to give ICE a seat on the company’s board.

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Ripple Researchers Propose Privacy-Preserving Transfers for XRPL Multi-Purpose Tokens

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The Ripple research team has published a paper on adding transaction privacy to the XRP Ledger (XRPL). 

The paper introduces Confidential Transfers for Multi-Purpose Tokens (Confidential MPTs). The goal is to enable institutional and regulated use cases, with issuer controls such as freezing and clawbacks.

Follow us on X to get the latest news as it happens

The paper is authored by Murat Cenk, Aanchal Malhotra, and Joseph Ayo Akinyele. The Confidential MPTs would be a cryptographic extension of the XLS-33 token standard, which went live on the XRPL mainnet in October 2025

The protocol replaces plaintext per-account balances with EC-ElGamal ciphertexts. Furthermore, it uses non-interactive zero-knowledge proofs to enforce transfer correctness and balance sufficiency without requiring decryption by validators. 

Meanwhile, sender and receiver identities remain visible, preserving XRPL’s account-based model

“To accommodate regulatory and institutional requirements, Confidential MPTs provide cryptographic auditability through an on-chain selective-disclosure model based on multi-ciphertext balance representations and equality proofs, while remaining compatible with simpler issuer-mediated audit models,” the abstract reads.

The timing aligns with shifting regulatory attitudes toward on-chain privacy. In a recent report submitted to Congress in early March, the US Treasury Department acknowledged that lawful users of digital assets may rely on mixers when transacting on public blockchains.

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The privacy paper arrives as Ripple simultaneously strengthens the network’s security foundation. The firm recently outlined an AI-driven security strategy for XRPL.

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The post Ripple Researchers Propose Privacy-Preserving Transfers for XRPL Multi-Purpose Tokens appeared first on BeInCrypto.

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DeFi Tokens Face Pressure as CLARITY Act Targets Stablecoin Yields

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

Key Takeaways

  • Proposed legislation would prohibit stablecoins from generating yields, limiting them to payment functions exclusively
  • The change would redirect yield opportunities toward traditional banking and money market instruments
  • Popular DeFi platforms including Uniswap, Aave, and Compound may encounter stricter regulations on value distribution
  • Trading volumes, liquidity depth, and token demand across DeFi could decline significantly
  • Regulated stablecoin issuers like Circle stand to gain from tighter integration with payment systems

The most recent iteration of the CLARITY Act has sparked significant discussion around its stablecoin provisions. Industry experts warn that decentralized finance tokens may bear the brunt of the legislation’s consequences.

Under the proposed framework, stablecoins would be prohibited from providing yields or any similar incentive structures, including balance-based rewards. This restriction would fundamentally transform stablecoins into payment instruments rather than blockchain-based savings vehicles.

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Markus Thielen, who established 10x Research, indicated that the legislation would effectively channel yield opportunities back into conventional financial systems. Traditional banks, money market vehicles, and compliant financial products would capture these benefits, while cryptocurrency-native services would lose competitive advantage in offering returns.

Initial speculation suggested that DeFi platforms might actually attract more users if centralized crypto services were prevented from distributing yields. The theory presumed capital would migrate toward onchain alternatives.

However, Thielen challenged this assumption. He explained that the CLARITY regulatory structure would probably apply to user-facing platforms and token economics, especially when fee structures or governance mechanisms begin resembling equity instruments.

Potential Impact on DeFi Platforms

This regulatory approach places numerous DeFi initiatives under scrutiny. Decentralized trading venues and lending services may encounter fresh restrictions governing their operations and value distribution mechanisms.

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Platforms such as Uniswap, Sushi, and dYdX face potential consequences, alongside lending services like Aave and Compound. Enhanced regulatory oversight might trigger diminished trading activity, thinner liquidity pools, and decreased token valuations, the 10x Research analysis suggests.

The fundamental question centers on whether these platforms can maintain fee distribution or incentive programs for token holders without triggering new stablecoin-focused regulations.

Thielen observed that distinguishing between governance tokens and regulated financial instruments grows increasingly complex within this regulatory framework.

Circle Positioned for Potential Gains

The legislation wouldn’t create obstacles for every cryptocurrency entity. Circle, which issues the USDC stablecoin, might emerge as a beneficiary under the proposed rules.

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Thielen characterized the regulation as fundamentally favorable for infrastructure providers like Circle. Should stablecoins become embedded within payment networks, issuers maintaining robust regulatory compliance would secure advantageous positions.

The CLARITY Act continues advancing through the legislative pipeline. Congress has not yet enacted a final version.

While stablecoin provisions dominate policy discussions in Washington, industry analysts emphasize that the ripple effects across DeFi ecosystems deserve equal attention.

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White House App Sparks Privacy Fears Over Tracking and Data Collection

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Business, Technology, Privacy, Adoption, White House, Applications

A new app from the US government has sparked concerns among users and researchers over potential location-tracking features, security vulnerabilities and data collection.

The White House launched the app on Friday as a way for users to get a “direct line to the White House,” including receiving breaking news alerts on major government announcements, watching livestreams and keeping up to date on “policy breakthroughs.”

However, users on X have raised concerns about the permissions required to use the app, including access to the device’s location, shared storage and network activity, though these claims have not been independently verified.

While many apps often request location permissions and can log user data, an app launched by the federal government requesting this information can invite additional concerns. 

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However, both listings on the Google Play Store and Apple’s App Store currently do not display these warnings.

A White House app privacy policy said it automatically stores information about the originating Internet Protocol (IP) address and other basic information, while it can retain names and email addresses of subscribers, though these are not required to use the app.

Business, Technology, Privacy, Adoption, White House, Applications
Source: Tyler Oakley

Cointelegraph has contacted the White House for comment.

Security engineer says GPS tracking is part of the app

On the app’s Google Play Store page, it states that personal data, including phone numbers and email addresses, may be collected through download and use. Apple’s App Store, meanwhile, directs users to the White House’s privacy policy.

A software developer using the X handle Thereallo, along with Adam, a security engineer and infrastructure architect, say they have identified code suggesting the app could access a device’s GPS for tracking.

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While the feature is common across a number of apps, Adam said it is unusual for location-tracking services to be in software that does not appear to need them.

“There is no map, no local news, no geofencing, no events near you, no weather. Nothing in the app that requires location,” he added.

Concerns of GPS tracking every 4.5 minutes

Thereallo made a similar claim that the app includes code that could enable tracking a device every 4.5 minutes in the foreground and 9.5 minutes in the background, though this has not been independently verified.

Business, Technology, Privacy, Adoption, White House, Applications
Source: Thereallo

They found that it still requires permission but warned that it is only “one call away from activating,” and that the tracking “infrastructure is there, ready to go.”

Related: Trump advisory council draws Coinbase co-founder, tech leaders

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At the same time, Thereallo said the app is collecting other data such as notification interactions, in-app message clicks and phone number.

Security could be broken, researcher says

Adam said the app’s security may also be weak enough for a technically skilled person to intercept its data or alter its functionality

“Anyone on the same Wi-Fi network, say, at a coffee shop, an airport, or a congressional hearing room, can intercept API traffic with a proxy. Anyone with a jailbroken device can hook and modify the app’s behavior at runtime,” he said.

“No servers were probed. No network traffic was intercepted. No DRM was bypassed. No tools were used that require jailbreaking. Everything described here is observable by anyone who downloads the app from the App Store and has a terminal.”

Magazine: Morgan Stanley Bitcoin ETF undercuts BlackRock, SBF pardon unlikely: Hodler’s Digest, Mar. 22 – 28

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