Ethereum Foundation Privacy Team Spins Out to Launch For-Profit Venture EthSystems
Backed by Joe Lubin and major Ethereum treasury firms, the spin-out aims to bridge the gap between public ledgers and Wall Street compliance requirements.
The team that spent the past year leading the Ethereum Foundation‘s institutional privacy efforts has spun out to launch a new independent, for-profit company.
The new venture, named EthSystems, launched on Tuesday with a mission to build privacy and compliance technology that enables banks and asset managers to transact on the public Ethereum blockchain without exposing sensitive data, such as trade details, positions, and client identities.
EthSystems represents the third organization to spin out of the Ethereum Foundation this summer, and the first to operate as a for-profit entity. The launch comes amid a broader restructuring at the Foundation, which has scaled back its internal operations in 2026.
## Solving Ethereum’s Privacy Gap
While Wall Street has increasingly embraced cryptocurrency as an asset class, institutional players have been slow to adopt public blockchains as commercial infrastructure. According to decentralized network monitors and asset trackers, Ethereum currently hosts $16 billion in tokenized real-world assets and $159 billion in stablecoins. However, industry experts note that major financial institutions remain hesitant to run large-scale transaction flows on a fully transparent, public ledger.
EthSystems aims to address this bottleneck by developing specialized confidentiality solutions. The firm’s founders argue that financial institutions will not fully migrate stablecoins, tokenized assets, and settlement systems to a public ledger until they can guarantee transaction privacy.
“Privacy is the difference between Ethereum holding billions today and running trillions tomorrow,” said Mo Jalil, CEO of EthSystems.
The startup enters the market with a year of open-source research and development already completed under the Ethereum Foundation. This work includes proofs of concept for private bonds, confidential stablecoin transfers, private cross-chain settlement, hardened shielded pools, and an “Ethereum Privacy Map” that catalogs institutional requirements across the decentralized ecosystem.
EthSystems plans to operate on a bespoke consulting model, offering architectural reviews, workshops, protocol specifications, and production-ready systems to institutional clients. The company stated it will continue to publish open-source research alongside its commercial engagements.
## A Restructured Ethereum Ecosystem
The launch of EthSystems coincides with a period of significant transition for the Ethereum Foundation. In an effort to streamline its focus, the Foundation has reduced its workforce by 20% this year, trimmed its budget, and wound down its in-house privacy and scaling research unit.
To fill the gaps left by these internal cuts, three distinct groups have transitioned out of the Foundation to operate independently:
* **Ethlabs**: A non-profit entity focusing on core protocol research.
* **Ethereum Institutional**: A non-profit organization coordinating outreach to banks and asset managers.
* **EthSystems**: The for-profit arm building applied privacy and compliance technology.
EthSystems was founded by Mo Jalil, Oskar Thorén, and Aaryamann Challani, who previously led the Ethereum Foundation’s Institutional Privacy Task Force. During their tenure, the task force conducted extensive consultations with central banks, regulators, tier-one commercial banks, and asset managers to map out compliance and privacy needs.
Jalil, a former Goldman Sachs analyst, is joined by Oskar Thorén, a veteran blockchain developer who spent nearly a decade building peer-to-peer messaging and privacy infrastructure, including the Waku protocols for Logos.
## Institutional Backing and Industry Support
The spin-out is backed by prominent figures and entities within the Web3 ecosystem. Key investors include Ethereum co-founder Joe Lubin, Asia-focused investment firm SNZ, and the two largest publicly traded Ethereum treasury companies, Bitmine Immersion Technologies and Sharplink.
These treasury firms hold substantial stakes in the success of Ethereum’s institutional adoption. Bitmine Immersion Technologies holds approximately 5.7 million ETH, while Sharplink holds roughly 888,000 ETH. Both companies have positioned themselves to public-market investors as foundational infrastructure plays for tokenized assets.
Tom Lee, Chairman of Bitmine, emphasized the necessity of privacy infrastructure for the future of digital finance, stating that “the next $100 trillion of assets won’t migrate on-chain without it.”
Joe Lubin also highlighted the unique positioning of the EthSystems team, contrasting their approach with previous attempts to provide institutional privacy. Lubin noted that prior solutions often amounted to “permissioned systems with extra steps,” whereas EthSystems is focused on bringing robust, decentralized confidentiality directly to the public Ethereum network.
