#ALEO# Core Inquiry Focus

Balancing Privacy and Compliance
Lawmakers question: completely private public chains may hinder regulatory agencies from tracking illegal activities (such as money laundering and terrorist financing).
Aleo Response Highlights:
✅ Adopts Programmable Privacy design, allowing developers to embed compliance tools (such as whitelists and transaction limit restrictions) at the application layer.
✅ Supports selective information disclosure (verifying identity through zero-knowledge proofs without exposing data) to meet the legitimate investigation needs of regulatory authorities.
Risks of ZKP Technology Abuse
Reference case: In 2024, Tornado Cash was sanctioned for facilitating money laundering, raising regulatory concerns about ZK technology.
Aleo Differentiation Strategy:
✅ Proactive Compliance Framework: Embedded KYC/AML interfaces, enterprises/institutions can customize compliance modules (e.g., on-chain transaction monitoring).
✅ Enterprise-level application orientation: Focus on B-end scenarios (such as financial and medical data sharing), avoiding regulatory risks of anonymous public chains.
 
Key actions to eliminate misinterpretation
Regulatory Cooperation: Aleo has initiated dialogues with financial regulatory agencies from multiple countries (such as FCA, SEC) to promote the establishment of a compliance framework for ZK technology.
Technical transparency: Publish ZK circuit code and accept third-party audits to prove that the system has no backdoors while supporting legitimate regulatory intervention.
Ecological control: Refuse to provide infrastructure for high-risk DApps such as mixers and anonymous tokens, reducing the possibility of abuse from the source.
 
User Communication Suggestions
Emphasize positioning:
"Aleo is not an 'unregulatable privacy chain', but rather achieves 'compliance-friendly privacy protection' through technology, serving the data security needs of regulated industries."
Response reference case:
"The essential difference with Tornado Cash is that Aleo actively designs compliance pathways, rather than treating privacy as an absolute right."
 
By clarifying the stance of "technology empowering compliance," we can effectively resolve market misunderstandings about regulatory suppression and simultaneously strengthen the trust foundation for institutional collaboration.