According to The Block on May 24, Mysten Labs co-founder and CPO Adeniyi Abiodun announced that the Sui blockchain will set all stablecoin transactions to be private transactions by default at the protocol layer, with only the sender and the recipient able to view the transaction details; Sui allows regulators and token issuers to access users’ transaction data through a “issuer-controlled visibility” architecture to meet compliance requirements.
Technical Architecture of Sui’s Privacy Model: Issuer-Controlled Visibility and Differences From Traditional Privacy Protocols
Sui’s privacy solution has a fundamentally different design philosophy from traditional privacy protocols such as Tornado Cash. Traditional privacy protocols enforce complete privacy for all parties (including regulators and issuers), which creates compliance hurdles in a regulatory environment. Sui’s solution adopts an “issuer-controlled visibility” model: ordinary third parties cannot access stablecoin transaction records; token issuers and regulators can access data on how users use their tokens through authorized channels.
This design gives institutions a viable on-chain compliance path in the following scenarios: when AML/KYC obligations require the issuer to retain audit-tracking capabilities; regulatory frameworks such as the “self-custody principle” require balancing user privacy with regulatory transparency; and the issuance of regulated assets such as bonds and stocks requires issuers to disclose holding information under certain circumstances. Abiodun confirmed that the function is implemented as a native protocol-layer feature rather than a third-party plugin, ensuring the integrity of the security model.
Confirmed Update Details: Privacy Functionality and Zero Gas Fee Deployment Status
Stablecoin default private transactions: currently in testing, with plans to launch on the 2026 mainnet; only the sender, recipient, and authorized regulators can view; subsequent plans to extend to stocks, bonds, and crypto assets have been confirmed
Zero-fee stablecoin transactions: officially enabled last week, allowing users to make stablecoin transfers without holding or consuming SUI tokens as Gas
Post-quantum cryptography testing: Mysten Labs concurrently tested post-quantum cryptography signatures on the Sui testnet, aiming to address quantum-computing threats in advance
Cumulative baseline data: since August 2025, Sui has already processed over $1 trillion in stablecoin transaction volume
Frequently Asked Questions
How does the “issuer-controlled visibility” model protect ordinary users’ privacy at the technical level while still opening access to regulators?
According to Abiodun’s explanation, Sui’s privacy architecture encrypts transaction details using cryptography into a format only designated parties can interpret; ordinary third parties only see encrypted, unreadable data. Issuers and regulators hold “view keys” (or equivalent mechanisms) managed by the protocol layer, enabling audit access to specific transactions without decrypting or broadcasting all on-chain data. The complete technical implementation specifications (including the specific cryptographic choices) have not yet been fully published in official documentation, and Mysten Labs confirmed that the feature is still in the testing stage.
What is the mechanism for Sui enabling zero-fee stablecoin transactions, and how does the issuer pay the related costs?
Traditional on-chain transactions require users to hold native tokens (such as ETH or SUI) to pay Gas fees. Sui’s zero-fee stablecoin transactions are implemented through a “sponsored transaction” model, where the stablecoin issuer or its designated protocol covers the Gas fee, rather than requiring the final user to pay. The practical impact on users is that they can pay directly with stablecoins without needing to hold SUI tokens in advance, significantly lowering the entry barrier for users—especially benefiting payment scenarios for ordinary users who do not hold any crypto assets.
What potential impact does the advancement of Sui’s stablecoin privacy features have on Europe’s stablecoin business under the MiCA regulatory framework?
MiCA (the Markets in Crypto-Assets Regulation) requires European stablecoin issuers to meet reserve requirements, audit obligations, and transaction traceability; transaction traceability requirements typically conflict with blockchain architectures providing complete privacy. Sui’s “issuer-controlled visibility” model is conceptually compatible with MiCA’s approach at the design level—regulators can access data with authorization while protecting the visibility of ordinary members of the public. However, whether Sui’s specific privacy implementation satisfies the concrete requirements of MiCA Articles 22–23 regarding the storage and access of transaction information still needs to wait for compliance assessment after the feature goes live; there is currently no official record of approval by any EU regulatory authority.
