A recent research paper co-authored by Ethereum founder Vitalik Buterin and a group of academics and blockchain infrastructure researchers delves into the challenges of ensuring privacy in blockchain transactions while also meeting regulatory comprliance.

The paper, released on Sept. 6, introduces a new synthesis based on the protocol called "Privacy Pools," which seeks to strike a balance between user anonymity and regulatory demands.

According to the paper, the new concept improving Privacy Pools will allow users to demonstrate that they did not receive funds from specific, potentially illegal, groups without revealing their exact sources of funding. The solution would utilize zero-knowledge proofs, a cryptographic technique that enables a party to confirm that they hold specific …