PEReDi: Privacy-Enhanced, Regulated and Distributed Central Bank Digital Currencies

Aggelos Kiayias, Markulf Kohlweiss, Amirreza Sarencheh*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Central Bank Digital Currencies (CBDCs) aspire to offer a digital replacement for physical cash and as such need to tackle two fundamental requirements that are in conflict. On the one hand, it is desired they are private so that a financial “panopticon” is avoided, while on the other, they should be regulation friendly in the sense of facilitating any threshold-limiting, tracing, and counterparty auditing functionality that is necessary to comply with regulations such as Know Your Customer (KYC), Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT) as well as financial stability considerations. In this work, we put forth a new model for CBDCs and an efficient construction that, for the first time, fully addresses these issues simultaneously. Moreover, recognizing the importance of avoiding a single point of failure, our construction is distributed so that all its properties can withstand a suitably bounded minority of participating entities getting corrupted by an adversary. Achieving all the above properties efficiently is technically involved; among others, our construction uses suitable cryptographic tools to thwart man-in-the-middle attacks, it showcases a novel traceability mechanism with significant performance gains compared to previously known techniques and, perhaps surprisingly, shows how to obviate Byzantine agreement or broadcast from the optimistic execution path of a payment, something that results in an essentially optimal communication pattern and communication overhead when the sender and receiver are honest. Going beyond “simple” payments, we also discuss how our scheme can facilitate one-off large transfers complying with Know Your Transaction (KYT) disclosure requirements. Our CBDC concept is expressed and realized in the Universal Composition (UC) framework providing in this way a modular and secure way to embed it within a larger financial ecosystem.
Original languageEnglish
Title of host publicationProceedings of the 2022 ACM SIGSAC Conference on Computer and Communications Security
PublisherAssociation for Computing Machinery (ACM)
Pages1739-1752
Number of pages34
ISBN (Electronic)978-1-4503-9450-5
DOIs
Publication statusPublished - 7 Nov 2022
EventThe 29th ACM Conference on Computer and Communications Security - Los Angeles, United States
Duration: 7 Nov 202211 Nov 2022
Conference number: 29
https://www.sigsac.org/ccs/CCS2022/home.html

Conference

ConferenceThe 29th ACM Conference on Computer and Communications Security
Abbreviated titleCCS 2022
Country/TerritoryUnited States
CityLos Angeles
Period7/11/2211/11/22
Internet address

Keywords

  • Privacy
  • Cryptography
  • CBDC
  • Distributed Ledgers
  • Regulatory Compliance
  • KYC
  • AML
  • CFT
  • KYT
  • Universal Composition

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