Can RWA assets become private and compliant?

I read about private RWAs including tokenized stocks over the weekend. I think I found an interesting conflict between what institutions want (privacy) and how blockchains work (public).

A fund managing large amounts doesn't want everyone to see its onchain positions, transfers, or trading activity. But the catch is, even regulated assets can't be completely invisible.

Depending on the RWA asset, you may need rules around KYC/AML, investor eligibility, jurisdiction, audits, etc.

In short, private RWAs need two things at the same time:

Privacy: random people shouldn't be able to inspect every position and transaction.

Compliance: authorized parties still need to know that the owner and transaction satisfy the relevant rules.

How do you solve both? Because I don't see tokenized assets getting serious institutional adoption if they have to pick one between privacy and compliance.

Is the solution some form of selective disclosure offchain?