Chainlink Unveils CCIP Private Transactions for Financial Institutions

Journalist

Tanzeel Akhtar

Journalist

Tanzeel Akhtar

About Author

Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk and Bitcoin Magazine.

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Last updated:

October 22, 2024 05:46 EDT

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Chainlink has launched CCIP Private Transactions, a new privacy-preserving feature powered by its blockchain technology and aimed at allowing financial institutions to maintain data confidentiality, integrity, and regulatory compliance when conducting cross-chain transactions.

In an announcement, Chainlink said this development addresses the pressing privacy concerns that have, until now, limited the involvement of institutions in blockchain ecosystems due to the need for secure, private transactions.

ANZ to Pilot CCIP Under MAS

One of the early adopters of this technology is the Australia and New Zealand Banking Group (ANZ), which will pilot the capability under the Monetary Authority of Singapore’s (MAS) Project Guardian.

This project focuses on the cross-chain settlement of tokenized real-world assets (RWAs), highlighting a use case that aligns with regulatory standards such as GDPR and MiFID II.

Previously financial institutions have been hesitant to engage with blockchain due to a lack of privacy solutions for cross-chain transactions. Regulations require end-to-end privacy for interactions between private blockchains, as well as limiting data exposure when transactions involve public blockchains.

Chainlink said its CCIP Private Transactions aims to tackle this issue by providing a new encryption and decryption protocol that preserves the privacy of transaction details, including data, token amounts, and involved counterparties.

This allows institutions to share only the necessary information for transaction processing while keeping sensitive data hidden from unauthorized parties.

Privacy Is Critical for Institutional Transactions

“Privacy is a critical requirement for most institutional transactions,” said Sergey Nazarov, Chainlink Co-founder in a statement. “Now that private transactions across chains are possible, we expect an even greater influx of institutional adoption of blockchains, CCIP, and the Chainlink standard in general,” said Nazarov.

The Blockchain Privacy Manager plays a central role in this update, allowing institutions to connect private blockchains with both public and other private blockchains using Chainlink’s Cross-Chain Interoperability Protocol.