On June 4, leaders from privacy-focused blockchain platform Secret and regulatory infrastructure company Zekret came together for an open discussion on how to balance decentralization, regulation, and privacy in Web3. Hosted on X Spaces by Adam Funnell from Secret Network Foundation, the session featured Dima Radin of Zekret Foundation and Artur Guliski of Zekret Labs, who shared their motivations, technical approach, and vision for regulatory-compliant innovation.
The conversation centred around a key challenge facing the industry: how to meet growing regulatory demands, such as Europe’s MiCA framework, without undermining the core values of decentralization and user privacy.
“KYC without privacy is worse than Web2,” said Adam, reflecting on the industry’s widespread handling of sensitive user data. “We’re asking people to submit their passport, selfie, utility bill, again and again across multiple platforms, with little clarity on how that data is secured.”
It’s a valid concern, especially in light of recent breaches like the Coinbase incident, where the unencrypted KYC data of 70,000 users was compromised. Lisa Loud, Executive Director of Secret Network Foundation, joined the conversation later to highlight this point further.
“I’ve worked with some of the biggest platforms, and what we saw with Coinbase was a warning shot. People want privacy. They want accountability. And they want systems that don’t treat their most sensitive data like a liability,” she said.
Lisa’s experience as a former executive at Paypal added weight to the discussion. “When I saw that breach happen, it felt personal. We can’t afford for that to be the norm. Privacy infrastructure isn’t optional, it’s essential.”
For Zekret, this isn’t just a theoretical issue, it’s one they’ve encountered directly while operating licensed crypto businesses.
“We’ve been in the space for years, running regulated businesses,” said Dima. “Regulation evolves constantly. We saw the need to stop reacting case by case and build a framework that could support long-term compliance.”
A Dual-Layer Model
The solution Zekret and Secret have developed involves a dual-layered system: a public, decentralized blockchain layer and a private compliance layer that handles verification securely.
“We created what we call a ‘source of truth map’,” Dima explained. “When a user joins, they’re verified through a trusted third party, a bank, a tax authority, or a KYC provider. We don’t store their personal data. We store who vouched for them.”
This approach ensures that privacy is preserved until a regulatory requirement demands identification. Only then is the user’s identity revealed, and only within a trusted framework.
Building Sustainable Infrastructure
Artur, who leads operations at Zekret, emphasized the importance of building systems that are both secure and practical.
“We’re not trying to make things harder for builders,” he said. “Our goal is to make compliance something that can be integrated from the start, not a burden that’s bolted on later.”
Adam echoed this sentiment, noting how rare it is in Web3 to find operational leaders focused on implementation and detail.
“A lot of Web3 projects struggle with operations,” Adam said. “Zekret doesn’t. And that’s thanks to Artur.”
Preparing for What’s Next
The broader vision behind the partnership is to offer infrastructure that can support the next wave of compliant, privacy-respecting Web3 applications, from tokenized assets and DeFi protocols to enterprise integrations and DAO governance.
“This is about future-proofing,” said Dima. “Regulation is coming. Rather than resist it or compromise privacy, we believe there’s a path to do both.”
Lisa Loud agreed, pointing to the importance of aligning privacy tech with regulatory readiness. “We need solutions that protect users and meet the expectations of regulators. It’s not either/or. It’s both/and.”
The Zekret–Secret model may offer a practical way forward for projects navigating the realities of today’s regulatory climate, and those planning for tomorrow’s.
