Aleph Zero Blog

Blockchain Compliance Solutions for Enterprises

Mar 5, 2024

In the last article, we’ve seen how blockchain compliance regulations are changing rapidly. They still retain a certain degree of uncertainty that might not be appealing for enterprise applications.

There are many solutions that address this need in the market by providing infrastructure and applications that streamline compliance processes for crypto-curious companies. These solutions range from the facilitation of blockchain compliance in the form of easy AML and KYC to privacy compliance guarantees using zero-knowledge (ZK) technology.

Let’s dive into what these solutions are at the level of infrastructure and at the level of applications that are built on top.

Blockchain Compliance in Infrastructure

First and foremost, we need to understand that in order to have blockchain compliance that is capable of handling the needs of enterprise users we need to have scalable infrastructure. Developing web3 solutions is currently limited by UX problems that involve high transaction times and latency as well as high transaction costs due to insufficiently evolved infrastructure.

This is tricky to navigate when most enterprise solutions would need to run computationally intensive processes. The implementation of demanding tools ranging from features for intellectual property protection to on-chain Anti-Money Laundering (AML) analytics and Know Your Customer (KYC) require a faster, leaner, and more programmable starting point for development. 

This is how scalable blockchain networks like Aleph Zero are driving enterprise adoption. They are easy to build on and offer near instant transaction finality at low costs. 

Another infrastructure-level need is to have embedded privacy protections that facilitate the development of privacy compliance for applications built on top. This entails the use of privacy frameworks that are compatible with a main L1 chain.

There are many ways to build this kind of framework but the most effective paths involve the use of ZK technology. Having ZK as primitive allows applications to build privacy-preserving features where users can demonstrate or prove the validity of their claims without having to reveal private information.

Aleph Zero is building a privacy engine that offers these primitives to developers working in the ecosystem. The engine will enable all sorts of enterprise-grade solutions as well as end-user applications that are both privacy-focused and compliant.

Blockchain Compliance in Applications

Being able to offer ZK primitives at the infrastructure level has great implications for blockchain compliance and privacy compliance in applications. It shifts the prerogative of having full privacy back to the individual or enterprise that uses the service, instead of having a platform or service make that decision. 

Proprietary IP Protections

For enterprise solutions in blockchain compliance, this means that companies can choose to make selective disclosures and prove claims while retaining trade secrets and proprietary IP. The implications of this are very important for institutional investors who might be deterred from participating in DeFi protocols, for example, because they might fear that their competitive advantages are exposed on a fully transparent ledger.

Streamlined AML and KYC

There are also solutions that can speed up due diligence processes as well as help companies offer easier AML and KYC to customers. Some solutions could provide on-chain AML using the right infrastructure. Others could even offer a one-time KYC on their ZK-based services that allows users to participate in applications across different blockchain ecosystems without repeating the process.

Compliance Solutions are Key to Adoption

As institutional and enterprise interest in web3 continues to grow, blockchain compliance solutions and privacy compliance solutions will become essential. Offering these kinds of services will soothe these users’ concerns over staying on the right side of the law while also providing them with the assurances they need that their competitive advantages are still applicable in this new setting.
Tune in to the Aleph Zero podcast to go in-depth and learn more about blockchain compliance and privacy compliance. Join the Aleph Zero community for updates on the latest developments on web3 privacy.