In a new article for the IMF’s Finance & Development magazine, BWC Member Andreas Veneris and his co-authors discuss the tension between privacy and compliance in digital assets. The authors argue that new “smart-compliant” payment systems, built directly into stablecoin blockchains, can resolve this tension. This “compliance-by-design” approach would use technologies like zero-knowledge proofs (ZKPs) to verify user identities and monitor for illicit activity in real-time, while still protecting the privacy of law-abiding users unless a legal warrant is issued.

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