Solana is expanding its suite of on-chain privacy features with a new framework called Confidential Balances, an evolution of its earlier “Confidential Transfers” initiative. While the new tools aim to give users and developers more control over what transaction data is visible on-chain, the approach appears focused on maintaining a balance between confidentiality and regulatory oversight.

First introduced under the Token2022 program, Solana’s confidential features are designed to obscure token amounts without compromising the ability to verify transactions. The latest iteration—Confidential Balances—extends those capabilities, offering token issuers and users new options to keep certain aspects of token activity, like transfers and supply changes, hidden from public view.

The confidentiality mechanisms rely on cryptographic techniques such as zero-knowledge proofs and homomorphic encryption. These allow Solana to confirm that a transaction is valid without disclosing its full details. That’s not a new concept in the blockchain space, but Solana’s approach is notable for being built directly into its token program infrastructure, rather than added on through separate privacy layers.

According to technical documentation, Confidential Balances introduces a broader set of functions beyond obscured transfers. These include the ability to hide transaction fees, as well as the minting and burning of tokens. In practice, that means projects could issue or destroy tokens without revealing the exact amounts involved, while still allowing the network to verify the actions.

For now, most of these features are supported through server-side infrastructure written in Rust. Developers building with Confidential Balances must manage key encryption processes and generate zero-knowledge proofs, typically using third-party or custom-built backend systems. Wallets that users interact with daily haven’t yet integrated native support, making the tools largely invisible to most people using the network.

That could change later this year. Solana developers are working on JavaScript-based zero-knowledge proof libraries that would allow these features to be handled within a web or mobile wallet, without the need for separate infrastructure. If those tools are rolled out as planned, it could make Confidential Balances more accessible for both users and developers.

One area the Solana Foundation and ecosystem teams appear especially cautious about is compliance. While the framework adds privacy, it doesn’t attempt to shield users from regulatory oversight. Features like “Auditor Keys” are built in to allow designated entities to view hidden data when necessary. That could prove important for institutional adoption, but it also means Solana is not positioning this as a tool for anonymity in the way some privacy-focused blockchains have done.