Private FX

Cross-border foreign exchange settlement on blockchain where trading intent, positions, and execution details must remain confidential. FX is one of the largest financial markets; 99% of stablecoins are USD-backed, making cross-currency settlement a natural blockchain application. Institutions require privacy to prevent front-running and protect trading strategies.

Additional Context

Actors

Banks · Payment Networks · Corporate Treasury · Liquidity Providers · Regulators · Stablecoin Issuers

Problems

Problem 1: Trading Intent and Front-Running Prevention

FX markets are highly competitive with tight spreads. Leaked trading intent enables front-running and adverse price movements.

Requirements:

  • Must hide: Order size, direction, timing, counterparty relationships
  • Public OK: General market liquidity, executed trade existence (after settlement)
  • Regulator access: Trade reporting for market surveillance; sanctions screening

Constraints:

  • Real-time settlement requirements
  • Liquidity fragmentation across stablecoin venues
  • Regulatory reporting obligations (EMIR, Dodd-Frank)

Problem 2: Cross-Border Settlement Privacy

International payments reveal business relationships and transaction patterns that competitors can exploit.

Requirements:

  • Must hide: Payment amounts, sender/receiver identities, payment purpose
  • Public OK: Settlement finality confirmation
  • Regulator access: AML/CFT monitoring; cross-border transaction reporting

Constraints:

  • Multi-jurisdictional compliance requirements
  • Correspondent banking relationships
  • SWIFT alternative positioning

Recommended Approaches

Approach TBD. Consider:

Open Questions

  • How does privacy interact with real-time gross settlement requirements?
  • What's the role of central bank digital currencies vs private stablecoins?
  • How to handle multi-currency atomic swaps with privacy?

Notes And Links