Privacy Pool Compliance
Compliance for privacy pools, proven without exposing users.
Prove a deposit is clean, verify every withdrawal and share information only when an authority has the right to see it. Users keep their privacy, and issuers stay compliant.
Who this is for.
Privacy pool protocols
Add a compliance layer to deposits and withdrawals without making the pool's transactions public.
Issuers, exchanges and OTC desks
Accept funds coming from a privacy pool when there is proof they were checked.
Institutions
Make private transfers and still keep a record your regulator can read.
Four services, one record.
Deposit screening (ASP)
As an Association Set Provider (ASP), AuditKey checks every deposit against sanctions lists and blocklists before the pool accepts it.
Proof of Innocence
The user proves the money does not come from a sanctioned or illicit source, without revealing their history.
Withdrawal verification
Whoever receives the money checks that the withdrawal carries a valid proof before accepting it.
Disclosure on request
Information is shared only with the authority that has the right to see it, only when it asks, and only within the scope of the request.
Blockchain Privacy Pools and AML Compliance.
Eleven chapters, published by AuditKey and built on research from Duke University. This whitepaper sets out our long-term view of privacy pools. The practical KYT guide is a separate document.
Why privacy pools need a compliance layer.
More stablecoin transactions now pass through privacy pools. There, traditional analytics tools have no public history to read. That is why the compliance check has to happen before the transfer is accepted.
What changes
| Before | Before | Now | |
|---|---|---|---|
| Watching every transaction | Proving the funds are clean | ||
| Analysis after settlement | Checks before the transfer is accepted | ||
| Identity tied to an address | Identity tied to verified credentials | ||
| One vendor's closed database | Many independent Association Set Providers |
The next era of institutional adoption belongs to protocols that can shield proprietary transaction data while simultaneously proving compliance to regulators.