COTI, a layer-2 protocol built on Ethereum and focused on privacy, has been named as one of the initial partners in the European Central Bank’s (ECB) digital euro initiative. The company shared the development through an official blog post, positioning the partnership as a significant validation of its growing expertise in central bank digital currency (CBDC) technologies. This invitation follows COTI’s earlier involvement in Israel’s digital shekel pilot, further emphasizing its expanding influence in shaping privacy-oriented financial infrastructures.
In its new role, COTI is expected to contribute privacy-enhancing technology tailored for “conditional payments” within the digital euro framework. These payments are designed to verify the origin of digital assets before any transaction is executed. By ensuring asset provenance, the system aims to uphold transaction integrity while maintaining user confidentiality.
The privacy mechanism COTI plans to implement is based on Garbled Circuits, a cryptographic method provided by Soda Labs. This technique allows for the execution of private computations on-chain without revealing sensitive user information. By embedding this solution into the ECB project, COTI aims to maintain transaction-level confidentiality while meeting the transparency standards required by regulated financial systems.
Leadership at COTI reportedly viewed the ECB invitation as a reflection of the company’s sustained commitment to innovation and technical excellence. According to its executive team, the inclusion in such a high-profile initiative reinforces the relevance of privacy solutions in the evolving landscape of Web3. They also suggested that as digital financial systems mature, privacy would continue to be a non-negotiable feature for both users and institutions.
The ECB’s roadmap outlines a target date of 2026 for the official launch of the digital euro. Until then, selected partners, including COTI, will be tasked with demonstrating how the currency can be integrated into existing retail payment systems. COTI’s contribution will focus on evaluating the performance and applicability of conditional payment systems, which are intended to offer eurozone users a combination of transaction privacy and traceability.
Concerns around European financial autonomy have also been influencing the ECB’s accelerated efforts. In late April, a senior official from the French central bank raised alarms about shifting U.S. policy in support of dollar-backed stablecoins. The official warned that increased adoption of such assets, particularly those encouraged by recent executive decisions in the United States, could pose risks to Europe’s monetary independence in the absence of a viable alternative like the digital euro.
In this context, the ECB’s partnership with firms like COTI signals an urgency to build a competitive, sovereign digital currency infrastructure. By embedding privacy and verification mechanisms from the outset, the central bank appears committed to aligning the digital euro with both user expectations and regulatory mandates.
COTI’s involvement marks a strategic intersection of blockchain innovation and institutional adoption. As the digital euro project progresses, its role may serve as a benchmark for how privacy-preserving technologies can be harmonized with central bank requirements in a rapidly digitizing global economy.
