Opinion by: Amal Ibraymi, authorized counsel at Aztec Labs
When cybercriminals breached UnitedHealth’s tech unit in 2025, almost 200 million individuals had their knowledge uncovered. Just a few months later, Coinbase admitted that abroad buyer assist brokers had been bribed for entry to person knowledge. These should not remoted occasions; they’re signs of a damaged system.
Current compliance guidelines meant to guard us pressure firms to stockpile huge quantities of delicate private knowledge, creating irresistible honeypots for hackers. Most companies don’t need this legal responsibility, however regulators demand it. This actuality has led to the notion that privateness and compliance are essentially at odds.
It doesn’t should be this manner. Breakthroughs like zero-knowledge (ZK) proofs and decentralized id make it potential to show compliance with out exposing delicate private knowledge. This implies verifying your age with out revealing your birthday or confirming eligibility with out disclosing your title. These applied sciences flip the script: Privateness isn’t a price of compliance; it’s changing into its strongest ally and even a aggressive benefit.
We’ve all been pressured to pay a privateness tax
For many years, compliance has acted like a shakedown of private knowledge. Regulators require firms to show they aren’t facilitating malicious exercise and are in compliance with Anti-Cash Laundering (AML) and Know Your Buyer (KYC) legal guidelines. Traditionally, the one approach for firms to make sure that is to gather giant quantities of delicate knowledge about their customers to confirm their clients’ identities.
The outcome? Huge liabilities. Knowledge leaks don’t simply result in embarrassing headlines; they put individuals susceptible to id theft, phishing and fraud. The “compliance by assortment” mannequin has turned on a regular basis companies into knowledge warehouses, susceptible by design.
Because of improvements like ZK-proofs, apps can efficiently adhere to compliance guidelines with out ever seeing or storing shopper knowledge. Customers can now affirm they’re not on a sanctions record with out exposing their identities. They will additionally present they’re of age to commerce with out revealing their birthdates. For the primary time in historical past, firms don’t should sacrifice person safety to abide by the principles.
Compliance with out the paper path is the long run
We now have the instruments to interrupt this cycle. Using ZK-proofs to resolve the difficulty of compliance and shopper safety isn’t merely a technical transfer; it’s a philosophical one. This shift marks the top of “compliance by assortment” and signifies the start of “compliance by computation” and absolute privateness by default and design.
ZK-proofs are rewriting the rulebook on verification by eradicating the necessity for a paper path altogether. They empower people to carry their credentials and solely share a sliver of data when required. On high of that, privacy-preserving analytics can add one other layer of safety, enabling oversight with out forcing firms to dump huge quantities of uncooked private knowledge into centralized areas which might be susceptible to attackers.
Associated: ZKPs can prove I’m old enough without telling you my age
These technical improvements aren’t simply hypothetical anymore; they’re already in motion. Final yr, the Buenos Aires government integrated ZK-proofs into its metropolis’s app to offer its residents extra privateness by default. The app is designed to offer customers entry to metropolis companies and delicate paperwork, permitting them to point out that they’re of age to purchase alcohol or file their vaccination statuses with out placing that private info in danger.
Corporations that prioritize privateness will achieve a aggressive edge
Compliance isn’t elective for firms; it’s important for continued operations. Enabling personal knowledge transactions is a alternative, nonetheless, and the businesses that select to guard person knowledge by means of ZK-proof-enabled options may have a aggressive benefit, particularly as shoppers more and more acknowledge privateness as a precedence.
ZK-proof-enabled privateness options additionally create added financial incentives for implementation, resembling elevated retention and lowered audit prices. Regulatory our bodies anticipate companies to implement rigorous requirements to show they’re assembly them, however traditionally, this has taken the type of firms accumulating treasure troves of person knowledge. These knowledge honeypots entice unhealthy actors and, in centralized programs, can result in huge knowledge hacks that make individuals susceptible to id theft, phishing scams and different assaults.
Privateness-preserving compliance flips the script: It permits firms to comply with the principles whereas conserving delicate info off the desk, constructing belief and decreasing danger in a single go.
Prospects are prone to belief manufacturers that may show they meet regulatory requirements with out stockpiling delicate info. For instance, instruments like Calimero Community’s knowledge verification and Taceo’s coSNARK community show compliance whereas conserving private particulars off the books. Options like ZKPassport empower individuals to show their nationality, age or residency with out exposing pointless info within the id house.
That is the way forward for compliance: proof with out overexposure. This strategy reduces the fallout of breaches, cuts down on compliance overhead and aligns with international traits towards knowledge minimization as mandated by privateness legal guidelines in Europe, the UK and state legal guidelines within the US. In crowded markets, that mixture is a major promoting level. The manufacturers that win would be the ones that may say, “We meet each requirement, and we nonetheless don’t know your birthday.”
Let’s goal for “simply sufficient info”
In the end, the actual query isn’t whether or not we will afford privateness; it’s whether or not we will afford to disregard it. Huge tech and regulators should transfer past knowledge hoarding and embrace new fashions that show to be compliant whereas giving simply sufficient info. Privateness-preserving compliance isn’t only a thought experiment. In the present day, it’s potential, it’s sensible, and it’s completely essential.
Opinion by: Amal Ibraymi, authorized counsel at Aztec Labs.
This text is for common info functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed here are the writer’s alone and don’t essentially replicate or symbolize the views and opinions of Cointelegraph.
