Blockchain technology has significant use cases for major financial institutions, which benefit from its immutable nature. Still, regulations and data privacy concerns have prevented many from fully embracing the technology. 

In its latest move, Chainlink hopes to address this issue. The blockchain network unveiled Private Transactions for its Cross-Chain Interoperability Protocol (CCIP). This feature will appeal to institutional players who must keep transactions private and confidential. 

Chainlink’s CCIP Private Transactions for Institutions 

Chainlink is making a big step towards institutional adoption of blockchain tech. On Tuesday, October 22, Chainlink announced CCIP Private Transactions, a privacy feature for its Cross-Chain Interoperability Protocol (CCIP). 

This new feature will come from Chainlink Blockchain Privacy Manager. This technology allows financial institutions to perform multichain transactions while ensuring data privacy. Private transactions also comply with data privacy regulations like the EU’s GDPR. 

The first institution to use the feature will be the Australia and New Zealand Banking Group (ANZ), with the Monetary Authority of Singapore’s Project Guardian. ANZ will use Chainlink’s CCIP Private Transactions to settle tokenized real-world assets (RWAs) across multiple blockchains.

What Private Transactions Change For Institutions

CCIP Private Transactions is a game changer for institutions for several reasons. It enables the sharing of data with third parties using a sophisticated encryption and decryption protocol, keeping transactions confidential without risking security. 

At the same time, institutions can set privacy parameters for each transaction. This enables them to adapt to different privacy requirements across jurisdictions. Moreover, banks can use this protocol to connect to both public and private blockchain networks seamlessly. 

So far, privacy concerns have been among the biggest hurdles to Decentralized Finance (DeFi) and blockchain adoption among banks and major financial institutions. If banks can maintain privacy, they will be more likely to engage with DeFi protocols as well. 

On the Flipside

Chainlink is not the only blockchain courting major institutions. In September, Franklin Templeton announced the launch of a mutual fund on the Solana Network. 

In September, 21.co, the company behind 21Shares, used Chainlink’s Proof of Reserves for their Wrapped Bitcoin (21BTC) on Ethereum and Solana.  

Why This Matters

Privacy concerns have been a significant roadblock to blockchain adoption by financial institutions. By addressing these concerns, Chainlink could attract more institutions to the industry. 

Source : DailyCoin - Oct 22, 2024