Controllable privacy preserving blockchain: Fiatchain: Distributed privacy preserving cryptocurrency with law enforcement capabilities

Rami Puzis, Guy Barshap, Polina Zilberman, Oded Leiba

Cyber Security Cryptography and Machine Learning: Third International …, 2019

Central banks are reluctant to accept cryptocurrency, because current implementations of decentralized privacy preserving transactions make it impossible to apply know your customer (KYC) and anti-money laundering (AML) procedures. In this paper, we augment a distributed privacy preserving cyptocurrency known as Monero with KYC and AML procedures. The proposed solution relies on secretly sharing of the clients’ private view keys and private transaction keys among a large number of permissioned signers (PSs). The resulting cryptocurrency maintains the notion of distributed trust while allowing a group of PSs to cooperate, collectively applying KYC and AML procedures.