For example, if you issue "liquid weapons grade plutonium" or some other proscribed asset the functionaries could be leaned on to not include in blocks with those trades, or not peg out to issuers. But if they were hidden by CT, that would make it impossible for functionaries to know.
Is that the idea for how to extend the trustlessness beyond inter-exchange trading?
Not well versed in this, but I do know that asset issuance uses "CA" (Confidential Assets) analogous to CT. Imagine the pedersen commitment being xG + aH + bJ where a is the bitcoin amount and x is blinding factor as in CT, then b is the amount of some asset. Believe it's along those lines. Only participants in a trade will know about it. Optional auditing etc. Not sure of much, haven't researched it.
@PaulTroon @waxwing @michaelfolkson
I've seen Mario give an overview talk of Liquid as well, and this point was discussed a bit: Functionaries were chosen to be geographically disperse, with the goal of mitigating political/judicial influence on functionaries. So any one govt can only put pressure to censor transactions on the functionaries within it's jurisdiction.
Not perfect by any means, but maybe 'good enough' for some use-cases..
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