Pseudonymous transactions on blockchains compliant with know your customer regulations and reporting requirements
A method for compliance with Know Your Customer (KYC) and other regulations includes a pseudonymous globally unique identifier stored on a blockchain that associates a pseudonymous first party address with a globally unique identifier representing the vetted identity of the owner of the address. The method also includes a trusted third party issuing a verifiable credential for a first pseudonymous party to a proposed transaction to a second pseudonymous party to the transaction.
1. A method for certifying compliance of a transaction with Know Your Customer (KYC), Anti-Money Laundering (AML), and/or other regulations on a blockchain without compromising the pseudonymity of parties to the transaction, the method comprising:
associating a first party blockchain address on a blockchain with a globally unique identifier (GUID) representing a vetted identity of a first party;
receiving, by a service hosted by a trusted third party, data describing a proposed transaction between the first party and a second party, the data provided by the first party;
issuing, by the trusted third party to the second party, a credential certifying a compliance score for KYC, AML, and/or other regulations of the proposed transaction between the parties, the credential being issued as an automated output of the service, wherein the association between the GUID and the first party blockchain address is confirmed by another credential issued automatically to the first party by a trusted third party service; and
providing, to the second party, the credential certifying the compliance score for recording.
2. The method of claim 1 , wherein a real identity and private information of the first party are known only to the trusted third party, in such an amount as to enable certification of compliance with KYC, AML, and/or other regulations.
3. The method of claim 1 , wherein the second party to the transaction is a smart contract on the blockchain, and the smart contract requires as input a credential certifying a compliance score for the first party that is sufficient to complete the proposed transaction.
4. The method of claim 1 , wherein the compliance score for a particular regulation or collection of regulations is a binary YES/NO.
5. The method of claim 1 , wherein the compliance score for a particular regulation or collection of regulations is a numerical value.
6. The method of claim 1 , wherein the credential is issued directly to the first party that transmits the credential to the second party.
7. The method of claim 1 , wherein the GUID is a Decentralized ID compliant with the World Wide Web Consortium (W3C) standard.
8. The method of claim 1 , wherein the GUID is a Non-Fungible Token (NFT) owned by the first party blockchain address that is compliant with the Ethereum Foundation standard ERC-721.
9. The method of claim 1 , wherein the GUID is the blockchain address of the first party.
10. The method of claim 1 , wherein the credential is a Verifiable Credential compliant with the World Wide Web Consortium (W3C) standard.
11. The method of claim 1 , wherein the another credential is a Verifiable Credential compliant with the World Wide Web Consortium (W3C) standard.
12. The method of claim 1 , wherein a regulatory agency can verify a real identity of the first party using content associated with the globally unique identifier.
13. The method of claim 12 , wherein the content associated to the globally unique identifier is salted and hashed identifying information, and the trusted third party provides the regulatory agency with the salt and identifying information, allowing the agency to verify that this hashes to the content associated to the globally unique identifier.
14. The method of claim 13 , wherein confidential information associated with the globally unique identifier (GUID) is obtained by the second party from the service of the trusted third party in an encrypted form readable only by the regulatory agency to which the details of the transaction and each party must be reported.
15. A non-transitory computer-readable medium storing executable instructions that, when executed, cause a computing device to perform operations comprising:
associating a first party blockchain address on a blockchain with a globally unique identifier (GUID) representing a vetted identity of a first party;
receiving, by a service hosted by a trusted third party, data describing a proposed transaction between the first party and a second party, the data provided by the first party;
issuing, by the trusted third party to the second party, a credential certifying a compliance score for KYC, AML, and/or other regulations of the proposed transaction between the parties, the credential being issued as an automated output of the service, wherein the association between the GUID and the first party blockchain address is confirmed by another credential issued automatically to the first party by a trusted third party service; and
providing, to the second party, the credential certifying the compliance score for recording.
16. The non-transitory computer-readable medium of claim 15 , wherein the second party to the transaction is a smart contract on the blockchain, and the smart contract requires as input a credential certifying a compliance score for the first party that is sufficient to complete the proposed transaction.
17. The non-transitory computer-readable medium of claim 15 , wherein the credential is issued directly to the first party that transmits the credential to the second party.
18. The non-transitory computer-readable medium of claim 15 , wherein a regulatory agency can verify a real identity of the first party using content associated with the globally unique identifier, and the content associated to the globally unique identifier is salted and hashed identifying information, and the trusted third party provides the regulatory agency with the salt and identifying information, allowing the agency to verify that this hashes to the content associated to the globally unique identifier.
19. The non-transitory computer-readable medium of claim 15 , wherein confidential information associated with the globally unique identifier (GUID) is obtained by the second party from the service of the trusted third party in an encrypted form readable only by a regulatory agency to which the details of the transaction and each party must be reported.