Starknet puts privacy back at the heart of blockchain development as new tools attempt to balance privacy with regulatory oversight.
Conclusion
- Starknet introduced STRK20, adding private balance and transfers to ERC-20 tokens.
- The system allows selective disclosure for regulators, auditors or compliance testing.
- The technology can enable private DeFi activity for assets such as Bitcoin, ETH and stablecoins.
On March 10, Starknet announced STRK20, a new ERC‑20 encryption capability to provide secret balances and private transfers while maintaining regulatory disclosure when needed.
This feature allows developers to place tokens on Starknet (STRK) with built-in privacy controls. Users can protect assets, keep balances privately, and transfer tokens without revealing transaction details on public blockchain explorers.
Currently, records may be disclosed to auditors, regulators or accountants as required by law.
Private balance and transfers for tokens
Blockchains like Bitcoin and Ethereum operate with complete transparency, meaning wallet balances and transactions can usually be seen by anyone. While this design improves auditability, it may also limit institutional participation and some financial use cases.
STRK20 tries to solve this problem. The system introduces what Starknet calls transaction layer privacy, where ownership of assets can remain hidden while transactions are carried out on the public network.
Once deployed, users can secure tokens to a private state, transfer them privately, or switch them back to a public state when needed. These functions are tied to the same pools of assets and liquidity, which prevent tokens from being split into separate public and private versions.
The first integration is already planned within the Starknet ecosystem. Privacy swaps are expected to be available on the Ekubo Protocol, while private staking options are also being explored for assets including Bitcoin and the Starknet token.
Privacy with compliance controls
The project also focuses on regulatory compliance, an area with historically limited privacy tools in crypto.
Instead of completely anonymous systems, STRK20 allows selective disclosure. Transaction details may be disclosed to approved parties such as regulators or auditors when required. This approach seeks to give institutions privacy in day-to-day operations while maintaining an audit trail for compliance purposes.
Starknet has already experimented with privacy-focused Bitcoin use cases. Earlier this year, the network introduced strkBTC, which allows for voluntary protection of Bitcoin balances and at the same time the opportunity to participate in decentralized financial programs.
Interest in privacy tools is growing in the crypto world. Trillions of dollars move into public blockchains every year, but anyone can see transaction details and wallet balances.
Privacy tokens can allow people to pay, trade and lend without exposing their financial activities. Starknet says this could make it easier to use blockchain while maintaining compliance.
