a16z invests 10 million USD! Privacy network Seismic tackles fintech pain points

The crypto assets startup Seismic has completed a $10 million funding round led by a16z crypto. Founded by Lyron Co Ting Keh, Seismic is building a blockchain privacy network aimed at allowing fintech companies to handle crypto assets transactions without exposing sensitive customer data.

The Fatal Flaw of Fintech: Privacy Vulnerabilities Hinder Crypto Adoption

(Source: Fortune)

Seismic indicates that the demand for Crypto Assets in the fintech space is rising, but privacy vulnerabilities continue to hinder its adoption. Founder Co Ting Keh wrote on X that driven by lower cross-border payment costs and on-chain lending, interest in Crypto Assets within the fintech community is growing rapidly, but privacy remains a major obstacle. This observation hits at the core pain points of the current fintech adoption of Blockchain technology.

Although traditional financial systems have efficiency issues, they have mature legal and technical frameworks for privacy protection. Details of bank transactions, credit card payments, and electronic wallet transfers are strictly protected, and only the transaction parties and necessary intermediaries can view the complete data. However, on public Blockchains, transaction records are by default transparent, and anyone can trace the flow of funds, which is a structurally unacceptable flaw for financial technology companies.

Imagine a lending platform that uses a public Blockchain, where users' borrowing amounts, repayment records, collateral asset values, and other sensitive information may be viewed and analyzed by competitors, potential employers, or even malicious actors. This level of transparency is seen as an advantage in the idealistic narrative of decentralized finance (DeFi), but for fintech companies serving millions of ordinary users, it poses a fatal compliance and business risk.

More seriously, many fintech application scenarios involve high-net-worth clients or corporate transactions, and these users have privacy requirements that are far above average. When a company uses Blockchain for cross-border payments, it does not want competitors to track its suppliers, payment amounts, and business scale. When high-net-worth individuals use on-chain lending services, they do not want their financial status to be publicly displayed. Privacy networks were created precisely to address this fundamental contradiction.

Seismic's privacy network technology architecture

Seismic aims to provide fintech applications with the same level of confidentiality that users expect from traditional finance, while retaining the advantages of an open encryption network. This vision sounds simple, but it is extremely challenging in terms of technical implementation. The transparency of the blockchain is the foundation of its trust mechanism, and how to maintain verifiability and decentralization while protecting privacy is a challenge that requires deep expertise in cryptography and distributed systems.

Seismic is establishing a privacy network on the blockchain for Crypto Assets, aimed at allowing fintech companies to process coin transactions without disclosing sensitive customer information. Although the company has not publicly released detailed technical specifications, based on its positioning, it may have adopted advanced cryptographic techniques such as zero-knowledge proofs, secure multiparty computation, or trusted execution environments. These technologies enable the verification of transaction validity without exposing the original data.

The company's infrastructure has already supported partners such as Brookwell (which provides stablecoin-based cash accounts) and Cred (a private credit platform). These early collaboration cases demonstrate that Seismic's privacy network is not just a theoretical concept but a production system that is already operating in real financial applications. As a stablecoin cash account provider, Brookwell needs to handle a large amount of user deposit and withdrawal records, making privacy protection crucial for its user experience. Cred, as a private credit platform, involves extremely sensitive financial information, and without strong privacy guarantees, it cannot operate at all.

Core Advantages of the Seismic Privacy Network

Financial-grade privacy protection: Transaction details are only visible to relevant parties, and third parties cannot track the flow of funds or transaction patterns.

Compliance-Friendly Design: While protecting privacy, it still meets regulatory requirements such as Anti-Money Laundering (AML) and Know Your Customer (KYC).

Seamless Integration Capability: Financial technology companies can adopt blockchain technology without significantly altering their existing business processes.

Advantages of Open Networks: Retain the characteristics of decentralization, anti-censorship, and programmability of Blockchain.

The key to this technological architecture lies in finding a balance between privacy and verifiability. Complete privacy may lead to regulatory issues and the proliferation of illegal activities, while complete transparency sacrifices business and personal privacy. Seismic's privacy network is clearly attempting to establish a model of “selective disclosure,” allowing transaction participants and regulatory agencies to view necessary information while concealing sensitive details from the public.

The Strategic Judgment Behind a16z's Lead Investment

a16z crypto's decision to lead the $10 million financing for Seismic was not a coincidence. As one of the world's leading venture capital firms in the crypto assets space, a16z crypto has invested in industry benchmark projects such as Coinbase, OpenSea, and Uniswap over the past few years, and its investment judgments are often forward-looking and carry significant industry implications.

a16z's investment this time can be seen as a clear bet on the trend of integrating “Fintech + Crypto Assets”. When traditional venture capitalists look at projects, they focus not only on the team and technology but also on market size and timing. The fintech market itself is already a massive market worth hundreds of billions of dollars, and if blockchain technology can solve privacy issues and truly penetrate this market, the potential value will be astronomical.

In addition, the participation of well-known investment institutions such as Polychain, Amber Group, TrueBridge Capital, dao5, and LayerZero Labs further validates the business logic and technical feasibility of Seismic. Notably, the inclusion of LayerZero Labs is particularly significant, as LayerZero is a leading cross-chain interoperability protocol, and its involvement suggests that Seismic's privacy network may have cross-chain capabilities, enabling it to operate across multiple Blockchain ecosystems.

a16z's continuous investment (participating in both seed and current financing) demonstrates its firm confidence in Seismic's long-term development. In the crypto space, continuous bets from top VCs often signal that a project has reached critical milestones. From the seed round in March to the new round of financing now, only a few months apart, this rapid follow-up funding typically indicates that the company has made significant progress in product development, user growth, or business partnerships.

Commercialization Path and Future Outlook

The company plans to expand fiat recharge and withdrawal channels as well as credit card projects, and expects to start generating income from transaction fees at the beginning of next year. This commercialization strategy is clear and feasible. Fiat recharge and withdrawal are core functions of fintech applications and key links to the mainstream adoption of Crypto Assets. By establishing its own fiat channels, Seismic can not only provide customers with a more complete solution, but also capture revenue from more value chain segments.

The expansion of credit card projects has more room for imagination. If Seismic can launch an encryption credit card based on its privacy network, users will be able to use crypto assets for everyday purchases while protecting their privacy. This type of product will compete directly with traditional payment networks like Visa and Mastercard, but will offer lower transaction fees and stronger privacy protection.

The transaction fee model is a standard monetization method for Blockchain infrastructure, characterized by predictability and scalability. As more and more fintech companies adopt Seismic's privacy network, transaction volumes will grow exponentially, while marginal costs will increase almost negligibly, making the economies of scale for this business model extremely significant.

From a broader perspective, Seismic is seizing a strategic market position. As global regulators shift their stance on crypto assets from outright resistance to conditional acceptance, compliant and privacy-focused blockchain infrastructure will become a necessity. Seismic's privacy network is right at the eve of this demand explosion.