Aston leads €3.65m EU project to bring privacy tech to DeFi

A 17-organisation Horizon Europe consortium will build cryptographic tools letting users prove regulatory compliance without exposing personal data.

By Disrupts Editorial Team Mon, 9 November 2026 AI level 2 of 5

AI level 2 of 5: drafted by our AI editorial assistant from the company's announcement; fact-checked, edited and signed off by Mark Walker, Editorial Director. What the levels mean

A long corridor in a data center is lined with dark server racks displaying glowing blue and green indicator lights, leading to a glass-partitioned office space with desks and computers, brightly lit by overhead ceiling panels.

Aston University is coordinating a €3.65 million, three-year research programme aimed at resolving one of decentralised finance's most persistent structural tensions: how to satisfy anti-money-laundering and identity rules without forcing users to surrender the personal data those rules are designed to protect. The project, named PETs4DeFi, draws together 17 organisations from 11 countries and is funded through the European Union's Horizon Europe programme, with additional backing from the European Cybersecurity Competence Centre.

The consortium held its founding meeting at Aston Business School in October 2026 and is part of the university's Centre for Cyber Security Innovation. Principal Investigator Dr Bogdan Adamyk, who leads from Aston Business School, frames the ambition clearly: "People should not have to choose between their privacy and the rules that protect everyone in finance. PETs4DeFi will show that both are possible."

Privacy-preserving proofs meet financial compliance

At the technical core of the project are privacy-enhancing technologies (PETs), a broad class of cryptographic methods that allow a party to prove a statement is true without revealing the underlying data. In a DeFi context, a user could demonstrate to a protocol that they have passed the required identity verification without disclosing the specific documents or personal details involved. This approach, known in cryptography as a zero-knowledge proof, is already deployed in narrow contexts across the blockchain sector, but applying it at scale to regulated financial services, where regulators and courts may need auditable trails, remains largely unsolved.

The consortium will test the tools across lending protocols, digital asset exchanges, non-fungible token platforms, and digital identity wallets. Notably, the partners will also design security methods intended to withstand future attacks from quantum computers, acknowledging that the cryptographic assumptions underpinning today's privacy tech may be vulnerable within the decade.

Convergence across cryptography, regulation, and capital markets

The project sits at a convergence point that capital markets are beginning to price seriously. Institutional interest in tokenised assets and on-chain financial infrastructure has grown rapidly, yet compliance uncertainty remains the single most-cited barrier to mainstream adoption. Major asset managers and custodians have positioned tokenised funds and bond issuances on public or permissioned blockchains, but regulatory bodies in the EU, UK, and US have signalled that pseudonymous transaction records are insufficient for anti-money-laundering purposes. PETs4DeFi is, in effect, a publicly funded attempt to build the compliance layer that would make institutional-grade DeFi structurally viable.

The geopolitical dimension is also worth noting. Funded through Horizon Europe and supported by a pan-European cybersecurity body, the project reflects the EU's deliberate strategy of shaping global technical standards for digital finance before they are set elsewhere. The EU's Markets in Crypto-Assets regulation (MiCA) is already the most comprehensive crypto-asset framework in force among major economies; building open-source privacy-compliance tooling through Horizon research is consistent with Brussels' approach of using public funding to anchor standard-setting in European institutions.

For the broader fintech and cryptography investment community, the output matters beyond academia. The project commits to releasing open-source software and regulatory guidance, lowering the cost of compliance experimentation for smaller protocol developers and potentially seeding a new layer of RegTech tooling built on cryptographic proofs rather than raw data disclosure. If the consortium delivers, the intellectual property baseline it establishes could shape how DeFi platforms architect their compliance stacks for the next regulatory cycle, particularly as quantum-resistant cryptography transitions from a theoretical concern to a procurement requirement across financial services infrastructure.

The three-year timeline runs to late 2029, placing its outputs squarely in the window when several central bank digital currency pilots and the next iteration of MiCA technical standards are expected to crystallise.