Paper 2022/1634

Division of Regulatory Power: Collaborative Regulation for Privacy-Preserving Blockchains

Abstract

Recently, fast advances in decentralized blockchains have led to the rapid development of decentralized payment systems and finance. In decentralized anonymous payment systems such as Monero, Zerocash and Zether, payment amounts and traders' addresses are confidential to other users. Therefore, cryptocurrency may be used for illegal activities such as money laundering, bribery and blackmails. To solve this problem, some decentralized anonymous payment schemes supporting regulation have been proposed. Unfortunately, most solutions have no restriction on the regulator's power, which may lead to abuse of power and disclosure of privacy. In this paper, we propose a decentralized anonymous payment scheme supporting collaborative regulation. Different from existing solutions, our scheme prevents abuse of power by dividing the regulatory power into two regulatory authorities. These two regulatory authorities, namely Filter and Supervisor, can cooperate to recover payment amounts and traders' addresses from suspicious transactions. However, neither Filter nor Supervisor alone can decode transactions to obtain transaction privacy. Our scheme enjoys three major advantages over others: 1) We design a generic transaction structure using zk-SNARK, 2) divide regulatory power using the regulation label, 3) and achieve aggregability of transaction amounts using the amount label. The experimental result shows that the time cost of generating a transaction is about 11 s and the transaction fee is about 12,183k gas, which is acceptable.

Note: Preprint.