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

Abstract

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.