Terminal 3, a Web3 startup based in Hong Kong, has raised $8 million in early funding to improve its data privacy and security.
The company plans to grow its platform that helps businesses manage digital IDs and credentials in a secure, decentralized way. Currently, it already supports nearly 8 million users across various industries and blockchain networks.
The funding was led by Illuminate Financial and the CMCC Titan Fund, with support from other investors, including Animoca Brands, Progression Fund, IDG Blockchain, and Cherubic Ventures.
Existing investors, including 500 Global, Consensys Mesh, Hard Yakka, and BlackPine, also participated.
The startup will use the funds to enhance technology and support global adoption.
Their focus remains on complying with data privacy regulations while promoting enterprise growth.
Zero-knowledge proofs emerge as a cornerstone of Web3 privacy solutions.
Terminal 3 is using zero-knowledge cryptography, a type of technology that keeps user data private while still allowing systems to work correctly. This shows a bigger trend in the tech world, where more companies are focusing on ways to protect privacy without losing features.
ZKPs (zero-knowledge proofs) are gaining popularity in the blockchain world. They let you prove something is true without sharing the actual data. This is very useful for keeping sensitive information safe in decentralized systems.
Companies like zkSync are already using this technology to make secure transactions on Ethereum. At the same time, platforms like Manta Network are creating complete systems of apps that protect user privacy using zero-knowledge proofs (ZKPs).
This technology helps solve a key challenge in Web3: how to use and verify data while still keeping it private. This is especially important for businesses, as protecting data is essential if Web3 is to be widely adopted by companies.
The increasing use of ZKPs shows how cryptographic technology is moving from theory to real-world solutions that can support millions of users. For example, Terminal 3 is already reaching nearly 8 million users.
Expanding regulatory landscape accelerates privacy tech investment.
Terminal 3’s funding comes at a time when the global regulatory environment is rapidly evolving, significantly increasing compliance challenges for businesses that handle user data.
New privacy laws in several U.S. states, starting in 2024 and 2025, are focusing on reducing the amount of data collected and improving data management. This is making it harder for businesses to meet the different rules in each state where they operate.
The international rules are also changing, with many countries adopting privacy laws similar to the GDPR. This has created a complicated mix of overlapping requirements that businesses now have to manage.
The growing regulatory pressure is driving demand for solutions like Terminal 3, which can help businesses meet compliance rules without affecting the user experience. For instance, 83% of consumers now see data privacy as the most critical factor in trusting a brand.
The privacy technology market is responding to these challenges, with several well-known companies, including OneTrust, raising significant funds to offer solutions. OneTrust, for example, provides tools to help businesses manage data privacy at an enterprise level.
AI agent autonomy creates urgent new privacy and security challenges
Terminal 3’s focus on “authentication and authorization platforms for AI agents” tackles a vital challenge as AI systems become more capable of accessing sensitive user information.
The market for AI systems that act autonomously is expected to grow significantly over the next ten years. This will bring new privacy and security challenges, as these AI agents will handle sensitive tasks like financial transactions and booking travel.
This fast growth means we need new ways to build trust. When AI agents work on their own for users, traditional methods of checking who has access are no longer enough, so we need more advanced ways to manage permissions.
Regulators are paying closer attention to how AI affects privacy, especially when it comes to sensitive data, such as children’s information. This is adding extra compliance challenges for companies using autonomous AI systems.
Combining Web3 technologies with AI brings together two powerful innovations. Decentralized identities and credentials could help solve trust issues, making it easier for AI agents to be adopted.
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