In a recent blog post, Vitalik Buterin, co-founder of Ethereum, urged Web3 wallet developers to enhance privacy and security features.

He stressed that the advantages of decentralization and security inherent in Ethereum can only be fully realized if wallets also embody these qualities.

To achieve this, Buterin suggested integrating private transfers directly into wallets, proposing a 'private balance' stored within a privacy pool to facilitate these transactions.

Currently, private transfers on Ethereum require the use of specialized 'privacy wallets', which limits user participation and convenience.

Buterin also proposed features that would simplify asset transfers across Ethereum's layer-2 (L2) networks, such as allowing users to send tokens directly to addresses formatted with the L2 network suffix.

Additionally, he advocated for the integration of multisignature authorization in all Web3 wallets to enhance security.

Since September 2024, Buterin has been promoting the decentralization of layer-2 solutions, stating that he will only recognize those at 'stage 1' of decentralization from 2025 onward.

The context for these developments includes a recent US court ruling in favor of Tornado Cash, which indicated that the US Treasury Department overstepped in sanctioning the privacy protocol, potentially encouraging the growth of on-chain privacy features.