In regulated finance, privacy is not optional—it's a legal imperative under frameworks like GDPR and MiCA. Public blockchains, where every transaction detail is visible, pose a significant compliance hurdle. Dusk's answer is a sophisticated dual-transaction model, offering both public and private settlement rails to meet diverse regulatory and business needs.
· Phoenix: The privacy-preserving protocol. It uses zero-knowledge cryptography to shield transaction details, transforming it from an anonymity tool into a compliant one. Crucially, it allows for selective disclosure, meaning the sender's identity can be revealed to the receiver to satisfy "Know Your Customer" (KYC) and anti-money laundering rules.
· Moonlight: The public transaction layer. Added to simplify integration with exchanges and institutions, it provides full transparency where required, ensuring Dusk avoids delisting risks from platforms that mandate public audit trails.
This architecture proves that privacy and auditability are not mutually exclusive. Institutions can leverage blockchain's efficiency while embedding compliance—such as investor accreditation or transfer restrictions—directly into the token's smart contract logic via the XSC standard. Dusk provides the essential infrastructure for a new class of Confidential Security Tokens that are both private by default and fully verifiable by regulators.
