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A Note on Privacy and Compliance for Stablecoins

15 Pages Posted: 7 May 2025 Last revised: 8 May 2025

See all articles by Darrell Duffie

Darrell Duffie

Stanford University - Graduate School of Business; National Bureau of Economic Research (NBER); Canadian Derivatives Institute

Odunayo Olowookere

York University - Osgoode Hall Law School; Queen Mary University of London

Andreas Veneris

University of Toronto - Department of Electrical and Computer Engineering, and Department of Computer Science

Date Written: May 05, 2025

Abstract

This note explains how modern stablecoin payment systems can have a high degree of privacy and yet be consistent with regulations governing sanctions, Know Your Customer (KYC), Anti-Money Laundering (AML), and Countering the Financing of Terrorism (CFT). This goal can be achieved by embedding privacy-preserving compliance mechanisms directly into the stablecoin's distributed ledger.

Keywords: Payment systems, blockchain, stablecoins, privacy, AML/CFT compliance, Financial regulation

Suggested Citation

Duffie, James Darrell and Olowookere, Odunayo and Veneris, Andreas, A Note on Privacy and Compliance for Stablecoins (May 05, 2025). Available at SSRN: https://ssrn.com/abstract=5242230 or http://dx.doi.org/10.2139/ssrn.5242230

James Darrell Duffie (Contact Author)

Stanford University - Graduate School of Business ( email )

655 Knight Way
Knight Management Center
Stanford, CA 94305-7298
United States
650-723-1976 (Phone)
650-725-8916 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Canadian Derivatives Institute ( email )

3000, chemin de la Côte-Sainte-Catherine
Montréal, Québec H3T 2A7
Canada

Odunayo Olowookere

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Queen Mary University of London ( email )

United Kingdom

Andreas Veneris

University of Toronto - Department of Electrical and Computer Engineering, and Department of Computer Science ( email )

10 King's College Rd,
Toronto, Ontario M5S 3G4
Canada

HOME PAGE: http://https://www.eecg.utoronto.ca/~veneris/AndreasVeneris.htm

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