ZK-Proofs Could Bridge Crypto Privacy and Law, a16z Says

ZK-Proofs Could Bridge Crypto Privacy and Law, a16z Experts Say

Written by Aaron S.,

Editor-In-Chief

Last Updated: August 21, 2025

Key Takeaways

a16z policy experts said ZK-proofs can confirm clean funds at exchanges while keeping user transaction details private;
ZK-proofs could prove facts like citizenship without exposing sensitive documents or extra personal data;
They noted that ZK-proofs are becoming easier to scale and highlighted other privacy tools like homomorphic encryption.

Ace quick missions & earn crypto rewards while gaining real-world Web3 skills. Participate Now! 🔥

BITDEGREE IN YOUR SOCIAL FEED

a16z crypto policy experts Aiden Slaven and David Sverdlov argue that zero-knowledge proofs (ZK-proofs) can strike a balance between privacy and regulation.

In a report published on August 19, they explained that this cryptographic method can confirm facts, such as the origin of funds, without forcing users to reveal all transaction details.

They see this as especially relevant when digital assets are exchanged for traditional money. If users present ZK-proofs at these points, banks and exchanges would gain confidence that funds are legitimate while individuals keep their on-chain activity private.

ICO vs IDO vs IEO: Which One's the Best? (Easily Explained)

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

Slaven and Sverdlov highlight that ZK-proofs could also handle everyday verifications, like confirming citizenship, without requiring sensitive documents. Instead of sharing a passport or license, a proof could confirm status while hiding unnecessary details such as address or date of birth.

Some critics worry that privacy-preserving tools are too complex or heavy for large-scale use. The two authors responded that ongoing improvements are reducing these limits. They noted that researchers and developers are making ZK-proofs faster and easier to use.

They also encourage looking beyond ZK-proofs. Homomorphic encryption, for example, allows certain data points to be processed without unlocking other information. Multiparty computation lets groups calculate results together without disclosing their own inputs. Differential privacy protects people when survey or usage data is aggregated.

Meanwhile, SoFi Technologies recently announced plans to launch a Bitcoin Lightning and UMA-powered transfer service. How does it work? Read the full story.