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Starknet launches ERC-20 privacy layer for compliant DeFi

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Starknet launches ERC-20 privacy layer for compliant DeFi

Starknet is returning privacy to the center of blockchain development as new tools attempt to balance confidentiality with regulatory oversight.

Summary

  • Starknet introduced STRK20, adding private balances and transfers to ERC-20 tokens.
  • The system allows selective disclosure for regulators, auditors, or compliance checks.
  • The technology could enable private DeFi activity for assets like Bitcoin, ETH, and stablecoins.

On March 10, Starknet announced STRK20, a new privacy capability designed to give ERC‑20 tokens confidential balances and private transfers while keeping the option for regulatory disclosure when required.

The feature allows developers to deploy tokens on Starknet (STRK) with built-in privacy controls. Users can shield assets, hold balances privately, and transfer tokens without revealing transaction details on public block explorers.

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At the same time, records can still be disclosed to auditors, regulators, or accountants if legally necessary.

Private balances and transfers for tokens

Blockchains such as Bitcoin and Ethereum operate with full transparency, meaning wallet balances and transactions can usually be viewed by anyone. While this design improves auditability, it can also limit institutional participation and certain financial use cases.

STRK20 attempts to address that issue. The system introduces what Starknet calls transaction-layer privacy, where asset ownership can remain hidden while the execution of transactions still occurs on a public network.

Once deployed, users can shield tokens into a private state, transfer them confidentially, or return them to a public state when needed. These functions remain tied to the same asset and liquidity pools, which avoids splitting tokens into separate public and private versions.

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The first integrations are already planned within the Starknet ecosystem. Privacy-enabled swaps are expected to be available on Ekubo Protocol, while private staking options are also being explored for assets including Bitcoin and the Starknet token.

Privacy with compliance controls

The project also focuses on regulatory compatibility, an area that has historically limited privacy tools in crypto.

Instead of fully anonymous systems, STRK20 allows selective disclosure. Transaction details can be revealed to approved parties such as regulators or auditors when required. This approach attempts to give institutions privacy in daily activity while maintaining an audit trail for compliance purposes.

Starknet has already been experimenting with privacy-focused Bitcoin use cases. Earlier this year, the network introduced strkBTC, which allows optional shielding for Bitcoin balances while still enabling participation in decentralized finance applications.

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Interest in privacy tools is growing in the crypto world. Every year, trillions of dollars move on public blockchains, but anyone can see transaction details and wallet balances.

Privacy tokens could let people pay, trade, and lend without exposing their financial activity. Starknet says this could make blockchain easier to use while still maintaining compliance.

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Crypto World

Bitcoin Could Hit $1M if it Tracks Gold

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Bitcoin Could Hit $1M if it Tracks Gold

Bitcoin needs to make up just one-sixth of the global “store of value” market, currently dominated by gold, to reach $1 million per coin, argues Bitwise chief investment officer Matt Hougan.

In a blog post on Tuesday, Hougan said that most dismiss the lofty forecast for Bitcoin, as it would require Bitcoin to muscle into 50% of gold’s current market value.

However, Hougan said the “mistake” most people are making is ignoring the growth of gold and the broader “store of value” market.

Gold’s market cap has grown at around 13% annually since 2004, from $2.5 trillion to around $38 trillion, driven by “rising concerns about government debt, geopolitical uncertainty, easy monetary policy, and other factors.”

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“If this growth rate continues, the global ‘store of value’ market will be [around] $121 trillion in 10 years. At that level, Bitcoin only needs to take 17% of the market to be worth $1 million a coin.”

Gold market cap from 2004 to the present. Source: Bitwise Asset Management

Related: Bitcoin undervalued relative to gold signals potential rally: Analyst

Hougan cited the growth of institutional investment, such as exchange-traded funds, sovereign wealth funds, and increasing portfolio allocations as potential catalysts.

“There are still miles to go, but with these undercurrents, capturing one-sixth of the store-of-value market in 10 years doesn’t seem extreme,” he said, adding:

“As I see it, the base case — that the store-of-value market will continue to grow as it has, and Bitcoin will continue to gain market share as it has — leads you to much, much higher prices than we have today.”

Bitcoin and gold divergence deepens

Hougan’s million-dollar Bitcoin (BTC) thesis depends on the asset continuing to converge with gold; however, the last several months have shown that Bitcoin hasn’t been moving in lockstep with gold.

The price of gold hit an all-time high of $5,327 per ounce in late January, and it is just 2.2% away from that today, whereas Bitcoin is currently trading down 44% from its October peak.

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Billionaire investor Ray Dalio cautioned against Bitcoin as a long-term store-of-value and safe-haven asset in early March, stating that gold was much better.

He argued that central banks are not buying BTC, which he said behaves more like a tech stock.

Greg Cipolaro, global head of research at NYDIG, said on March 6 that it appears Bitcoin is “not currently being priced as a macro hedge, a sovereign risk hedge, or a real-rate or inflation trade.”

“That dynamic helps explain the ongoing frustration around Bitcoin’s failure to ‘act like gold’ despite the digital gold label.”

Bitcoin and gold markets have been diverging since the October crypto market crash. Source: Google Finance

Magazine: China’s ‘50x’ blockchain boost, Alibaba-linked AI mines Bitcoin: Asia Express