Self-custodial trading platform Sedona has announced a partnership with privacy infrastructure provider Fhenix to integrate Confidential FHE (CoFHE) into its Arbitrum-based ecosystem.
The move will replace Sedona's existing Trusted Execution Environment (TEE)-based privacy model with Fully Homomorphic Encryption (FHE), allowing sensitive financial data to remain encrypted even while computations are performed.
The partnership was announced today, with technical integration currently underway.
Moving beyond hardware-based privacy
Sedona, founded by Tyler Maxwell, combines self-custodial banking services with spot trading, perpetual futures and structured investment products. As part of its ongoing migration from the Seismic ecosystem to Arbitrum, the platform plans to deploy Fhenix's CoFHE infrastructure to strengthen privacy protections across its services.
Once the integration is complete, user balances, portfolio positions and spending limits assigned to AI agents will remain encrypted by default, reducing the amount of sensitive information exposed during trading and portfolio management.
Unlike many existing privacy solutions in decentralized finance, which rely on Trusted Execution Environments or committees of validators, Fully Homomorphic Encryption enables computations to be carried out directly on encrypted data without requiring users to trust the underlying hardware or intermediary operators.
Fhenix argues that replacing hardware-based trust assumptions with cryptographic security represents an important step toward making privacy a standard feature of decentralized financial applications.
"Sedona is exactly the kind of application Confidential FHE was built for," said Guy Itzhaki, CEO of Fhenix. "Trading platforms and financial applications need privacy that extends beyond transactions to balances, positions and increasingly the parameters that autonomous agents operate within. By moving from trusted hardware to cryptographic guarantees, Sedona is showing how confidential finance can become a native capability on Arbitrum rather than an optional feature. We believe this partnership is an important step toward making privacy a default expectation for onchain financial applications."
Privacy for AI-powered finance
According to Sedona, the transition to FHE also reflects the growing role of AI within financial applications.
By keeping AI agent spending limits encrypted, the platform aims to allow autonomous systems to execute predefined strategies without revealing sensitive financial information or portfolio allocations.
Maxwell added that privacy has become increasingly important for users who rely on stablecoins for savings and everyday payments, particularly in emerging markets where access to traditional financial services may be limited.
The integration forms part of a broader trend toward confidential computing in blockchain infrastructure as developers explore ways to combine transparent public networks with stronger privacy protections.
Once deployed, Fhenix's CoFHE infrastructure will enable Sedona users to manage assets, automate investment strategies and interact with AI-powered tools while keeping core financial data encrypted throughout the process.
The companies believe the partnership demonstrates how confidential computing can evolve from a niche feature into a foundational component of decentralized financial services built on Arbitrum.
Dan Burgin
U.Today Editorial Team
