Chainalysis has used Canton Network as the main example of sub-transaction privacy in a new analysis of how compliance teams can monitor privacy-focused blockchains.
Published on July 29, the article examines four different approaches to blockchain privacy. Canton’s model keeps both the existence and details of a transaction out of public view. The parties involved automatically receive only the information relevant to them, while compliance teams, partners and regulators can be given access on a need-to-know basis.
Why institutions want more control over data
Public blockchains such as Ethereum and Solana allow anyone to view transaction histories. That openness has helped these networks attract users and liquidity, but it does not always suit financial institutions that need greater control over counterparties and sensitive transaction information.
Chainalysis says institutional demand for privacy is mainly about protecting data, rather than creating complete anonymity.
This has encouraged the development of hybrid networks that retain shared blockchain infrastructure while giving participants more control over who can see specific information.
How Canton’s privacy model works
Chainalysis uses a delivery-versus-payment trade to explain Canton’s approach.
When cash is exchanged for a security, the bank processing the payment can see the cash movement without seeing details of the security. The securities registrar can see the change in ownership without seeing the payment.
Each participant receives the information needed for its part of the transaction, but not the full picture.
This is what Chainalysis describes as sub-transaction privacy. Information is shared between the relevant participants rather than broadcast across the network.
Different networks require different compliance tools
Canton is one of four privacy models covered in the analysis.
Chainalysis also examines shielded pools on Zcash, confidential transfer extensions on Solana and private smart contracts on Aztec. Each approach hides different information and provides a different route for compliance access.
On Canton, a token issuer can grant an analytics provider visibility into transfers involving a specific asset. On other networks, oversight may depend on viewing keys or disclosure requirements built into an application.
As a result, compliance teams cannot use one monitoring method across every privacy-focused network. Their tools and access arrangements need to match the way each network handles private data.
Compliance teams also need to monitor the points where assets move between public and private systems. These can include bridges, smart contracts and deposit addresses.
Privacy is becoming core infrastructure
Chainalysis describes privacy as an increasingly important part of blockchain infrastructure as institutional adoption grows.
For Canton, the practical takeaway is that privacy is selective rather than absolute. Transaction data is not made public, but authorised organisations can receive the information they need for compliance and oversight.
