Sherry Xiao, founding engineer at Aptos Labs, said that Aptos’s newly launched privacy coin could address a long-standing trade-off between protecting user privacy and maintaining transparency for compliance.
"Confidential APT" launched on the Aptos mainnet on Friday, following the approval of a governance proposal to integrate this privacy feature, which received nearly unanimous support. The feature uses zero-knowledge proofs to conceal token balances and transfer amounts while still enabling transaction verification.
Source: Aptos
Although blockchain provides transparency not available in most traditional ledgers, the lack of privacy—potentially exposing sensitive financial information—has slowed adoption by individuals and businesses.
Xiao told Cointelegraph that Confidential APT, pegged 1:1 to Aptos (APT), can reduce users' risk of wallet profiling or targeted scams:
Portfolio sniper attacks, social pressure from visible holdings, and personal safety—these are real pain points people are experiencing today.
Confidential APT can hide salaries and business strategies.
Xiao said that the Confidential APT token also addresses a real-world issue in the workplace.
“If a company pays salaries using on-chain visible amounts, every employee’s salary will be permanently public—colleagues, competitors, recruiters, everyone can see it,” she said.
“Fund transfers, settlement flows, and trading strategies are the same,” Xiao said, noting that the lack of privacy on blockchain is a “dealbreaker” for many businesses.
However, Xiao said, "Confidential balances can directly solve this issue."
A backdoor feature can be enabled for investigation purposes.
Xiao stated that at the time of the investigation or when the subpoena was received, Confidential APT could still satisfy Know Your Customer and anti-money laundering reviews using the audit key.
She noted that the audit key can only be authorized after a successful on-chain governance vote:
This approach allows relevant parties to obtain information such as transfer amounts during investigations, while maintaining privacy as the user’s default setting.
Although Confidential APT hides token balances and transfer amounts, the associated wallet addresses and transaction validations remain visible, distinguishing it from other privacy-focused cryptocurrencies like Monero (XMR).
Xiao indicated that she expects individual users to adopt Confidential APT faster than enterprises, noting that integrating this privacy coin into tax reporting processes and compliance systems will still take some time.
However, she added, "If Confidential APT runs on the mainnet for six months with steady trading volume and no issues, it will serve as a proof point for shortening the enterprise sales cycle."