arXiv:2507.08853v1 Announce Type: cross Abstract: As archives turn to artificial intelligence to manage growing volumes of digital records, privacy risks inherent in current AI data practices raise critical concerns about data sovereignty and ethical accountability. This paper explores how privacy-enhancing technologies (PETs) and Web3 architectures can support archives to preserve control over sensitive content while still being able to make it available for access by researchers. We present Clio-X, a decentralized, privacy-first Web3 digital solution designed to embed PETs into archival workflows and support AI-enabled reference and access. Drawing on a user evaluation of a medium-fidelity prototype, the study reveals both interest in the potential of the solution and significant barriers to adoption related to trust, system opacity, economic concerns, and governance. Using Rogers' Diffusion of Innovation theory, we analyze the sociotechnical dimensions of these barriers and propose a path forward centered on participatory design and decentralized governance through a Clio-X Decentralized Autonomous Organization. By integrating technical safeguards with community-based oversight, Clio-X offers a novel model to ethically deploy AI in cultural heritage contexts.