Three Leading Privacy Chains Raise Over $1 Billion: Why Are Institutions Betting on the "Invisible Blockchain"?

In May 2026, the crypto industry entered a period marked by clear structure and intense fundraising activity. Three institution-focused privacy blockchains—Arc by Circle, Canton by Digital Asset, and Tempo, co-incubated by Stripe and Paradigm—collectively raised over $1 billion between October 2025 and May 2026, with a combined valuation exceeding $10 billion. Their backers include top-tier players from both traditional finance and crypto, such as BlackRock, Goldman Sachs, a16z, Stripe, Paradigm, Intercontinental Exchange, Nasdaq, and S&P Global.

On May 12, 2026, Bitwise CIO Matt Hougan commented on this funding wave in his blog, predicting that privacy could become crypto’s next "killer app." He pointed out that, on current public blockchains, enterprise transactions are broadcast before completion and employee salaries can be viewed by anyone on a block explorer. For institutions, he argued, this level of transparency is "a vulnerability, not a feature."

This view is rooted in a critical industry backdrop: the fully transparent ledger design of Ethereum and other leading public chains is becoming a major roadblock to large-scale institutional adoption.

Triple Drivers: Regulatory Breakthroughs, Technical Maturity, and Key Milestones

This fundraising boom is not an isolated event, but the result of several converging trends.

On the regulatory front, on July 18, 2025, the US President signed the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), establishing the first comprehensive federal regulatory framework for payment stablecoins and clarifying issuer and reserve requirements for compliant stablecoins. The bill had previously passed the Senate on June 17, 2025, by a 68-30 vote, and the House on July 17 by 308-122.

From a technical perspective, the maturation of privacy technologies such as zero-knowledge proofs, trusted execution environments, and selective disclosure has brought "verifiable privacy" from theory to practical engineering. In May 2026, GoDark built dark pool infrastructure on Solana using zero-knowledge proofs, while Deluthium deployed an institutional-grade dark pool execution layer on Arbitrum.

Key events timeline:

• October 2025: Tempo completes a $500 million Series A round at a $5 billion valuation, led by Greenoaks and Thrive Capital, with Sequoia participating. That same month, Arc launches its public testnet, with over 100 institutions participating.
• December 2025: Canton developer Digital Asset raises $50 million.
• January 2026: Goldman Sachs releases an institutional survey showing 35% of institutions see regulatory uncertainty as the biggest barrier to crypto adoption, while 32% cite regulatory clarity as the main catalyst.
• February 2026: Several major financial institutions complete the first cross-border intraday repo transaction on Canton Network, settling with tokenized UK government bonds.
• March 18, 2026: Tempo mainnet officially launches, along with its Machine Payment Protocol (MPP).
• March 23, 2026: Visa is approved as a Canton Network super validator node, receiving the highest weight of 10.
• April 30, 2026: Visa expands its stablecoin settlement pilot to nine blockchains, adding Arc, Canton, Tempo, Base, and Polygon, with an annualized settlement run rate of $700 million.
• May 11, 2026: Circle announces the completion of Arc token presale, raising $222 million at a fully diluted valuation of $3 billion, with a16z leading with a $75 million commitment. On the same day, Bloomberg reports that Digital Asset is raising about $300 million at a roughly $2 billion valuation, led by a16z crypto.
• May 12, 2026: Bitwise CIO Matt Hougan publishes a blog post positioning privacy as crypto’s next "killer app."

Three Approaches: Configurable, Default Privacy, and Permissioned Consensus

Although the funding amounts and investor rosters are similar, the three chains differ significantly in technical approach, target clients, and privacy implementation.

Arc: A Stablecoin-Centric Economic Operating System

Arc, launched by stablecoin issuer Circle, is positioned as an "economic operating system." Its core design features include USDC as the native gas token, sub-second finality, selective privacy, and EVM compatibility. In an internal memo, a16z partners Ali Yahya and Noah Levine wrote, "A handful of blockchains will become the new backbone of the financial system," and Arc is well positioned to be one of them.

Arc’s privacy model is "configurable privacy": institutions can choose to reveal or conceal data based on transaction type, rather than an all-or-nothing approach. In its tokenomics, 60% of ARC tokens are allocated to network builders and participants, while Circle retains 25% for operating validator infrastructure.

Arc’s investor lineup directly reflects Circle’s strategic intent—traditional financial infrastructure giants like BlackRock, Intercontinental Exchange, Apollo Global Management, SBI Group, Janus Henderson, and Standard Chartered Ventures are all involved, signaling Arc’s core goal of deeply embedding USDC into institutional settlement, asset management, and payment systems.

Canton: A Privacy Collaboration Network for Financial Institutions

Canton, developed by Digital Asset Holdings, has the deepest track record of financial institution partnerships among the three. Its collaborators include Goldman Sachs, DRW, Citadel Securities, DTCC, Tradeweb, BNY Mellon, Nasdaq, and S&P Global. As of May 2026, Canton Network has processed over $6 trillion in tokenized assets.

Canton’s technical core is the open-source smart contract language Daml. Its privacy logic is fundamentally different from Ethereum: transactions are private by default and data is only accessible to authorized parties. This "default privacy" design directly addresses compliance needs—banks are legally required to protect client information and cannot accept broadcasting transaction data network-wide in real time. In February 2026, Canton completed its first cross-border intraday repo transaction, settled with tokenized UK government bonds in a market worth around $2 trillion.

Canton is best described as a "privacy collaboration layer for financial institutions," targeting banks, clearinghouses, and trading platforms that are already central to traditional financial infrastructure. Its fundraising cadence reflects this: $135 million in June 2025, another $50 million in December 2025, and a Bloomberg-reported $300 million round in May 2026, pushing its valuation to around $2 billion.

Tempo: High-Performance, Closed Architecture for Payments

Tempo, co-incubated by Stripe and Paradigm, completed a $500 million Series A at a $5 billion valuation in October 2025. Its technical path is distinct from Arc and Canton: Tempo is a Layer 1 public chain, forked from Ethereum and deeply optimized for fintech applications, using a proprietary permissioned consensus mechanism called Simplex BFT.

Tempo’s core innovations include: allowing gas fees to be paid in any stablecoin with built-in AMM for automatic conversion; a low-cost, predictable fee structure targeting sub-$0.001 per transaction; and native smart accounts supporting batch payments, gas sponsorship, and scheduled transactions. Tempo’s design philosophy is summed up as "the Apple of payment blockchains"—achieving top-tier user experience and business efficiency through vertical integration and a closed architecture.

In April 2026, Tempo announced a partnership with DoorDash to provide global payment services for merchants and couriers. Its target use cases include cross-border payments, FX settlement, and corporate treasury management—scenarios with near-zero tolerance for Ethereum-style full ledger transparency. Tempo’s mainnet went live on March 18, 2026.

Below is a comparative table of the three chains’ core data:

The Pain of Transparency: When Public Ledgers Become Business Liabilities

The institutional demand for privacy chains isn’t ideological—it’s an operational necessity. This can be understood on three levels:

Execution Layer: On fully transparent public chains like Ethereum, every pending transaction is broadcast in the mempool, allowing anyone to observe and front-run, creating fertile ground for MEV attacks (front-running and sandwich attacks). Verified research shows Ethereum users have lost over $1.3 billion to MEV-related attacks. For institutions executing large trades, this transparency turns an implicit tax into a structural risk—competitors can front-run transactions with millisecond precision.

Business Confidentiality: Blockchain’s transparent ledger means all transaction records are permanently public. Details like supply chain payments, partner identities, fund movements, and payrolls are freely accessible to competitors, regulators, and the public via block explorers. Bitwise CIO Hougan offers a sharp analogy: anyone can see how much you make, from whom, and when it lands. For enterprises, this isn’t just a privacy breach—it’s a systemic leak of competitive intelligence.

Compliance Obligations: Regulated financial institutions like banks are legally bound to protect client data. Uploading transaction data to a public blockchain is tantamount to broadcasting protected information in real time to all network participants, including competitors and foreign regulators. This is precisely why Canton chose a "default privacy" architecture.

Goldman Sachs’ January 2026 institutional survey quantifies these concerns: 35% of institutions cite regulatory uncertainty as the biggest barrier to crypto adoption, while 32% see regulatory clarity as the main catalyst. This shows privacy is not just a technical issue, but an institutional one. With the GENIUS Act’s passage in July 2025, the foundation for compliant infrastructure is being established.

Debates: Support, Compromise, and Critique

The privacy chain funding wave has sparked three interrelated market discussions.

Supporters: Privacy is the foundational infrastructure for institutional finance on-chain.

Bitwise CIO Matt Hougan is the most representative voice. In his May 12, 2026 blog, he explicitly calls privacy the "killer app" that will drive crypto’s next wave of mainstream adoption, noting that structural trade-offs between speed, cost, and privacy are the main barriers for institutions. He also highlights that the GENIUS Act’s passage opened the floodgates for institutional capital, with all three enterprise blockchains raising funds after its enactment.

a16z led both Arc and Canton’s recent rounds, committing $75 million to Arc alone. This back-to-back investment sends a clear market signal: privacy is not a crypto purist’s ideological pursuit, but essential infrastructure for traditional finance to enter the space.

Moderates: Privacy should be configurable, not binary.

A growing industry consensus is forming around "programmable privacy." In April 2026, Fireblocks’ Ran Goldi pointed out that stablecoin privacy is the main barrier to institutional adoption, and the trend is toward letting users balance transparency and confidentiality. This aligns with Arc’s "configurable privacy" model: institutions decide data visibility by transaction type, rather than choosing between total transparency and total anonymity.

The Ethereum ecosystem is also responding. The Ethereum Foundation’s PSE team released a roadmap shifting from "fully transparent ledgers" to "programmable privacy," aiming to add selective privacy features through stealth addresses, PlasmaFold, and zkTLS, while maintaining public chain openness.

Critics: Closed architectures undermine blockchain’s core value.

Tempo’s permissioned consensus and closed architecture have sparked controversy. When Stripe and Paradigm first announced Tempo in September 2025, many in the industry questioned the "Web2 giant builds its own public chain" model, seeing it as a departure from decentralization ideals.

There’s also ongoing debate about liquidity fragmentation if large volumes of institutional trades move from public chains like Ethereum to specialized private networks. When significant trading activity shifts to opaque venues, price discovery could fragment, potentially destabilizing the broader crypto market.

Far-Reaching Impact: Capital Reallocation and Industry Reshaping

The short-term impact of this funding wave is already visible, but the longer-term structural changes are even more significant.

Short-term: Capital reallocation. The three privacy chains’ combined $1+ billion fundraising stands out amid a generally subdued crypto VC landscape. It signals a shift from "public chain infrastructure arms race" to "vertical infrastructure for specific use cases." a16z raised $2.2 billion for its latest crypto fund in 2026 and has made consecutive bets on privacy chains. This capital allocation could reshape the industry’s resource flows.

Mid-term: Accelerated infrastructure stratification. The crypto industry is developing a two-layer structure: one for retail users and DeFi protocols on open public chains (like Ethereum and Solana), and another for institutional users on privacy chains. Visa’s inclusion of nine blockchains in its stablecoin settlement pilot shows that institutional payment infrastructure is integrating across public and private chains.

Below is a table of institutional participation in privacy chain ecosystems:

Long-term: Privacy standards could redefine industry entry thresholds. If "verifiable privacy" becomes the de facto standard for institutional on-chain finance, infrastructures lacking privacy features may be relegated from potential financial backbone to "public experimentation grounds." However, this trend also carries risks: concentrated privacy capabilities could create new centers of power, and insufficient decentralization in permissioned consensus models may remain a regulatory concern.

Conclusion

The privacy chain funding wave from October 2025 to May 2026 marks a new growth phase for the crypto industry. This phase is no longer about the grand narrative of "blockchain will disrupt traditional finance," but about the pragmatic question: "What features must blockchain add to truly integrate with the financial system?" The answers are unfolding across three chains: configurable privacy, default privacy, and permissioned consensus—each exploring a different path for institutional finance on-chain.

Transparency was once blockchain’s proudest feature. But as traditional financial giants seriously consider moving core business on-chain, their first demand is to hide what shouldn’t be seen by everyone. This need doesn’t reject blockchain’s ethos; rather, it’s a sign of technology maturing from experimentation to production. The real test isn’t the size of the funding round, but actual adoption after mainnet launch—that’s where the privacy chain narrative will ultimately be proven.