Bitwise CIO Matt Hougan: Privacy Becomes Core Competitive Direction of Crypto Infrastructure
Matt Hougan, Chief Investment Officer of Bitwise, stated that as stablecoins and asset tokenization enter the mainstream, privacy is becoming the core of competition in crypto infrastructure.
The three blockchains focusing on stablecoins and tokenization, Arc, Canton, and Tempo, have collectively raised over $1 billion, with a total valuation exceeding $10 billion. Among them, Arc, under Circle, completed a $222 million financing at an approximate valuation of $3 billion, Canton is seeking $300 million in financing with a valuation of about $2 billion, and Tempo has completed $500 million in financing with a valuation of $5 billion.
Hougan pointed out that after the passage of the U.S. GENIUS Act, regulatory clarity has improved, leading institutions to prefer privacy-compliant blockchains over fully transparent public chains, as traditional public chains have become flawed in scenarios requiring privacy.
Source: Public Information
ABAB AI Insight
Matt Hougan has repeatedly emphasized in several CIO memos at Bitwise that stablecoins and RWA tokenization will reshape financial infrastructure. This viewpoint continues his long-term tracking of institutional adoption pathways. Arc, as an extension of the Circle ecosystem, Canton driven by Digital Asset, and Tempo supported by Stripe and Paradigm, all reflect a strategic shift of traditional fintech companies towards building privacy-focused chains.
In terms of capital pathways, the over $1 billion in financing is shifting resources from general public chains to privacy-compliant specialized infrastructure, motivated by the need for enterprises to keep transaction data private. Additionally, the regulatory certainty provided by the GENIUS Act attracts traditional capital, with companies like Circle, Digital Asset, and Stripe locking in underlying control over stablecoin and RWA payment scenarios through their own chains.
Similar cases include early enterprise chains like Ripple and Hyperledger evolving towards privacy, as well as JPMorgan Onyx's institutional closed network. The current stablecoin/RWA industry is in a transitional control phase, shifting from public chain dominance to competition among enterprise-focused privacy chains, with valuations of Arc, Canton, and Tempo already far exceeding most Layer 1 chains.
Essentially, this represents a transfer of pricing power: the pricing power of blockchain privacy and compliance is concentrating from open-source transparent public chains to enterprise-grade dedicated networks. The mechanism is that after the GENIUS Act provides a regulatory framework, institutions are unwilling to accept the transparency flaw of "broadcasting every operation globally," and instead are willing to pay a premium for a privacy-compliant and auditable closed structure, accelerating the reconstruction of capital from general computing platforms to vertical financial infrastructure.
ABAB News · Cognitive Law
Transparency is the selling point of public chains, but a fatal flaw for institutions; privacy is the true ticket for enterprises to go on-chain. When regulation is clear, capital does not chase the most open chains, but rather the safest ones. The ultimate competition in infrastructure: whoever addresses the "invisible" needs will take the "visible" valuation.