Can public blockchains support confidential RWA assets?

I've been researching whether institutions can trade RWAs onchain without revealing all their trading information to the public. I found several solutions, each with its own trade-offs.

Zero-knowledge proofs can verify transactions without revealing sensitive details. Fully homomorphic encryption enables computation on encrypted data (though performance remains a challenge). Trusted execution environments offer better performance at the cost of trusting the hardware setup. Another option is using private or permissioned chains.

What if we could add privacy directly to public chains instead? For example, private RFQs could hide trading intentions, while shielded transactions could keep transfer details confidential.

I am still confused about how all this would work with existing DeFi solutions.

Can we use confidential RWA tokens as collateral or trade them using public liquidity pools? And how can institutions selectively disclose information to auditors without making everything public?