A new for-profit entity called EthSystems has been spun out from the Ethereum Foundation's Institutional Privacy Task Force (IPTF), aiming to provide confidential systems for regulated financial institutions on Ethereum. The company announced it has secured cornerstone investments from Consensys founder Joe Lubin, Ethereum treasury firm Bitmine, and Sharplink, among others.
Origins and Team
EthSystems was founded by three former Ethereum Foundation members—Mo Jalil, Oskar Thorén, and Aaryamann Challani—who previously worked on the IPTF for several years. During that time, they engaged with hundreds of central banks, regulators, and top financial institutions globally, and released open-source infrastructure including privacy bonds, confidential stablecoin transfers, privacy cross-chain settlement, and an "Ethereum Privacy Map."
Business Model and Focus
Unlike the non-profit foundation structure, EthSystems operates as a for-profit company. The founders stated that this shift is necessary to meet the practical needs of commercial partnerships. Their business model involves providing customized consulting services to address the most critical obstacles institutions face when adopting Ethereum, essentially continuing their previous work but now charging fees. However, they emphasized a continued commitment to open-source contributions and protocol transparency.
The primary pain point for traditional financial institutions on public blockchains is privacy exposure. Banks and asset managers cannot reveal transaction details, holdings, or client identities to competitors or the public on a fully transparent ledger. EthSystems plans to leverage zero-knowledge proofs (ZK Proofs) and other cryptographic techniques to enable regulated institutions to conduct large-scale financial activities on Ethereum without disclosing sensitive information.
Industry Support and Context
Bitmine chairman Tom Lee expressed optimism, noting that without privacy and security infrastructure meeting institutional standards, the next "hundred trillion dollars" of assets cannot migrate on-chain. Joe Lubin commented that many previous privacy solutions pitched to institutions were merely "permissioned systems with extra steps," while the EthSystems team deeply understands public blockchain privacy and has solid technical execution.
This spin-off is part of a broader restructuring at the Ethereum Foundation, which last month laid off 20% of its staff and reorganized into five "clusters," amid departures of several core developers and co-executive directors. The foundation has increasingly embraced its cypherpunk ethos of censorship resistance, openness, privacy, and security (CROPS). The EthSystems team noted that as the foundation moves toward more extreme decentralization, the market naturally requires an independent for-profit entity to offer more flexible choices for financial institutions at the intersection of technology and compliance.
EthSystems is the third peripheral organization to emerge from the Ethereum Foundation recently. Earlier, EthLabs was established to handle core protocol R&D, while Ethereum Institutional focuses on institutional outreach and engagement. Together, the three entities form a new support network for Ethereum's entry into mainstream finance.