How to resolve the contradiction between zero-knowledge proofs and regulatory compliance
Privacy and compliance are inherently opposed. The completely anonymous route like Zcash is not accepted by regulators at all. However, Dusk has taken a middle path. The Phoenix protocol uses ZK proofs to hide amounts and senders while retaining the viewing key mechanism, allowing auditors to selectively disclose information. This design is theoretically quite clever, meeting user privacy needs while also addressing the regulatory requirements of MiCA and MiFID II. The licenses from NPEX have indeed been legitimately obtained. The issue lies in whether this system is flexible enough in practice. How quickly can regulators respond when disclosure is required? If generating a viewing key requires manual intervention every time, the efficiency will be too low. Moreover, the more complex the compliance process, the worse the user experience. Many institutional users might prefer to choose the traditional financial system rather than deal with these technical details. Additionally, the competitor Oasis uses a TEE trusted execution environment. Although it is not as decentralized as ZK, at least the performance overhead is much lower. Aztec's client-side privacy execution also has its own advantages. Dusk needs to prove that its ZK+HE solution is truly better than competitors in real RWA scenarios.
$DUSK
