EthSystems spins out of Ethereum Foundation to target institutional privacy
A team from the Ethereum Foundation has launched a for-profit firm to solve the privacy constraints keeping trillions in tokenized assets and stablecoins off public ledgers.
EthSystems launched on Tuesday as a for-profit venture aiming to build privacy infrastructure for institutional users of Ethereum. The company was founded by the trio who led the Ethereum Foundation's Institutional Privacy Task Force over the past year. The new entity is the first for-profit group to spin out of the Foundation this summer.
The startup is tackling a fundamental barrier to Wall Street's adoption of blockchain networks: the public visibility of transactions. While banks and asset managers have embraced crypto as an asset class, they will not route stablecoins, tokenized assets, or settlement flows through a shared ledger if trade details and client identities remain exposed. "Institutions want to use Ethereum, but one of the biggest problems is the lack of built-in, modular privacy tools," the company said.
Led by CEO Mo Jalil, a former Goldman Sachs employee, the team conducted hundreds of conversations with central banks and tier-one lenders during its time at the Foundation. EthSystems will monetize this expertise through bespoke consulting, offering architecture reviews and production system builds. The firm has already published open-source proofs of concept for private bonds, confidential stablecoin transfers, and cross-chain settlement.
The company's funding round underscores the strategic importance of its mission to major Ethereum stakeholders. Backers include Bitmine Immersion Technologies and Sharplink, the two largest publicly traded Ethereum treasury firms, along with Ethereum co-founder Joe Lubin. Bitmine holds 5.7 million ETH and Sharplink holds 888,000 ETH, giving them a direct financial interest in driving institutional settlement onto the network.
Bitmine Chairman Tom Lee argued that "the next $100 trillion of assets won't migrate on-chain without it," referring to the need for institutional privacy. Jalil framed the technology as "the difference between Ethereum holding billions today and running trillions tomorrow." Lubin positioned EthSystems against competitors, stating that alternative privacy offerings often amounted to "permissioned systems with extra steps."
The launch reflects a broader restructuring at the Ethereum Foundation, which cut 20% of its staff in June and wound down its in-house privacy and scaling research unit. EthSystems follows two non-profit spin-outs—Ethlabs and Ethereum Institutional—marking a shift toward a leaner Foundation that outsources applied technology development to independent entities. Ethereum currently hosts $16 billion in tokenized real-world assets and $159 billion in stablecoins, a volume the new firm aims to expand by resolving the confidentiality requirements of traditional finance.
