diff --git a/CHANGELOG.md b/CHANGELOG.md index 77c34cd..f9d0a4d 100644 --- a/CHANGELOG.md +++ b/CHANGELOG.md @@ -4,6 +4,7 @@ All notable changes to the EthSystems Map are documented here. ## [Unreleased] +- fix: factual audit of the [Private Treasuries](use-cases/private-treasuries.md) entry and the cards one hop out. Fill the empty context section with sourced cash-pooling, transfer-pricing (OECD Chapter X, BEPS Action 13) and Kinexys/JPMD bullets and scope regulatory capital and liquidity reporting to regulated group entities in [Private Treasuries](use-cases/private-treasuries.md); in [Private Payments](approaches/approach-private-payments.md) add the deposit verification cost, note Aztec Alpha and the July 2026 V5 proving-system disclosure, replace the exit-game description of Stateless Plasma with proof-based exits, mark Plasma user proofs as server-side, note that MPC configurations can hide addresses, correct relay-set floors to the PoC spec and state the Resilient Disbursement Rails PoC scope; add FATF R.16 Travel Rule access, the Swift shared-ledger plan and a Resilient Disbursement Rails link in [Private Payments](use-cases/private-payments.md); state GENIUS Act effective date and ERC-7573 Draft status and oracle dependence, and move the Zama link to zama.org, in [Private Stablecoins](use-cases/private-stablecoins.md); date and source the tokenized Treasury market figure (rwa.xyz, 5 Oct 2026) in [Private Money Market Funds](use-cases/private-money-market-funds.md); replace the unsourced Asia municipal-debt line with Hong Kong digital green bonds and Japan's 2026 Local Finance Act amendment in [Private Government Debt](use-cases/private-government-debt.md) - fix(approach): [Private Money Market Funds](approaches/approach-private-money-market-funds.md): Phase 1 review for the MMF approach cycle. Stable- vs floating-NAV yield, aggregates at the fund's cadence, disclosure-key custody instead of threshold NAV opening, investor-side vs portfolio compliance, maturity corrected to `documented`, three new comparison rows, a conditional recommendation, and new open questions (collateral as a future extension). Links: `private-vaults` removed; `erc3643-rwa` and `private-mtp-auth` added. - fix(use-case): [Private Money Market Funds](use-cases/private-money-market-funds.md): fills Additional Context, scopes Rule 2a-7 to registered funds, updates gates after the 2023 amendments, cross-links open questions to the approach card, and lists it in the [Funds & Assets](domains/funds-assets.md) domain. - chore(pattern): re-review [Private Client Authentication for Institutional EOAs](patterns/pattern-private-mtp-auth.md) and [Compliance Monitoring](patterns/pattern-compliance-monitoring.md); no content change. diff --git a/approaches/approach-private-payments.md b/approaches/approach-private-payments.md index 4cf5fcd..9694b90 100644 --- a/approaches/approach-private-payments.md +++ b/approaches/approach-private-payments.md @@ -1,7 +1,7 @@ --- title: "Approach: Private Payments" status: ready -last_reviewed: 2026-09-29 +last_reviewed: 2026-10-05 use_case: private-stablecoins related_use_cases: [resilient-disbursement-rails, private-treasuries] @@ -136,7 +136,7 @@ example_vendors: [railgun] | Operation | Value | | ------------------ | -------------------------- | -| Gas: deposit | ~155K | +| Gas: deposit | ~155K + ~2.6M verification | | Gas: transfer | ~181K + ~2.6M verification | | Gas: withdraw | ~47K + ~2.6M verification | | Proof gen (client) | 410-991ms | @@ -197,7 +197,7 @@ poc_spec: pocs/private-payment/plasma/SPEC.md **Summary:** Operator-coordinated rollup posts only Merkle roots on L1; users custody their transaction history client-side. -**How it works:** Users build proofs of inclusion against operator-published roots. Operators batch transfers, generate aggregated SNARKs (Plonky2-style recursion), and post anchor data to L1. Withdrawals exit through an L1 anchor contract via an exit game; users prove sufficient balance to escape an offline operator. +**How it works:** Users build proofs of inclusion against operator-published roots. Operators batch transfers, generate aggregated SNARKs (Plonky2-style recursion), and post anchor data to L1. Withdrawals are claimed against the anchor contract with a zero-knowledge balance proof; users can submit balance proofs directly to exit when the operator is offline. **Trust assumptions:** @@ -207,7 +207,7 @@ poc_spec: pocs/private-payment/plasma/SPEC.md **Threat model:** -- Operator offline or censoring forces escape-game exits with weaker privacy +- Operator offline or censoring forces proof-based direct exits with weaker privacy - User data loss collapses to lost funds; backup architecture is load-bearing - Operator equivocation needs fraud-proof or multi-operator dispute @@ -216,14 +216,14 @@ poc_spec: pocs/private-payment/plasma/SPEC.md - Volume is high and minimal L1 footprint matters - Institution can run or contract user-side state custody - Forced withdrawal as a recovery path is acceptable -- End users custody their own state by design; operator cannot censor without triggering the exit game, making the I2U privacy property structural rather than contingent +- End users custody their own state by design; operator cannot censor without users falling back to proof-based direct exits, making the I2U privacy property structural rather than contingent **Avoid when:** - User-side state custody is operationally infeasible - Exit-delay risk is not tolerable for the asset class -**Implementation notes:** PoC uses Plonky2 with operator-side recursive aggregation; client proofs run in 5.9-9.8s, operator proofs in 38-49s. PlasmaBlind (folding-scheme aggregation) is a tracked alternative. +**Implementation notes:** PoC uses Plonky2 with operator-side recursive aggregation; user proofs (run by the balance-prover service, not on device) take 5.9-9.8s and operator proofs 38-49s. PlasmaBlind (folding-scheme aggregation) is a tracked alternative. #### Benchmarks @@ -233,7 +233,7 @@ poc_spec: pocs/private-payment/plasma/SPEC.md | Gas: transfer | Off-chain (operator-set fee) | | Gas: withdraw | ~343K (operator, amortized) | | Gas: batch | ~255K (operator, amortized) | -| Proof gen (client) | 5.9-9.8s | +| Proof gen (user) | 5.9-9.8s | | Proof gen (operator) | 38-49s | ### TEE-Based Privacy @@ -285,7 +285,7 @@ example_vendors: [taceo-merces] **Summary:** MPC nodes jointly compute transfers under secret-shared balances; co-SNARKs commit a verifiable summary on chain. -**How it works:** Bilateral counterparties send secret-shared inputs to an MPC committee that runs the transfer logic and produces a collaborative SNARK. The chain verifies the SNARK; counterparty addresses are public, but amounts and balance state are hidden under sharing. +**How it works:** Bilateral counterparties send secret-shared inputs to an MPC committee that runs the transfer logic and produces a collaborative SNARK. The chain verifies the SNARK; amounts and balances stay hidden, and addresses can be hidden too depending on configuration. **Trust assumptions:** @@ -296,7 +296,7 @@ example_vendors: [taceo-merces] **Threat model:** - Collusion above the threshold reveals all state -- Counterparty addresses leak; only amount confidentiality is provided +- Counterparty addresses leak unless the configuration hides them - MPC committee liveness is an availability boundary **Works best when:** @@ -340,7 +340,7 @@ example_vendors: [] **Trust assumptions:** - IResilientIdentity operator and implementing partner are distinct legal entities, jurisdictions, and personnel -- Relay set meets size and jurisdictional-diversity floors (pilot N≥8 / ≥2 operators / ≥2 jurisdictions; production N≥16 / ≥4 operators / ≥3 jurisdictions) +- Relay set meets size and jurisdictional-diversity floors (pilot ≥8 independent operators, production ≥16, with jurisdictional diversity) - Smartcard secure-element vendor and applet supply chain - Mesh transport availability for last-mile @@ -391,7 +391,7 @@ Engineering capacity dictates a lot. L1 Shielded Payments is the lightest integr ### Legal & risk perspective -This is a perspective for legal review by the deploying institution, not legal advice. L1 Shielded Payments and Privacy L2, paired with viewing-key disclosure, expose per-jurisdiction view keys and attestation logs (EAS, ONCHAINID) as the disclosure interface; whether that interface satisfies MiCA, GENIUS Act, or another regime is a question for jurisdictional review. Stateless Plasma adds operator records as an additional disclosure surface that legal review would scope. TEE attestations are typically accepted by auditors who already accept HSM-rooted custody, but acceptance varies by regulator. MPC exposes per-counterparty audit; address-level visibility may limit use to known-counterparty contexts depending on the regulator's view. Resilient Disbursement Rails inverts the disclosure model by minimizing what each party holds; whether a humanitarian regime accepts that posture depends on the donor policy and the destination-country regulator, and legal sign-off would document the minimization and the multi-jurisdiction relay roster. +This is a perspective for legal review by the deploying institution, not legal advice. L1 Shielded Payments and Privacy L2, paired with viewing-key disclosure, expose per-jurisdiction view keys and attestation logs (EAS, ONCHAINID) as the disclosure interface; whether that interface satisfies MiCA, GENIUS Act, or another regime is a question for jurisdictional review. Stateless Plasma adds operator records as an additional disclosure surface that legal review would scope. TEE attestations are typically accepted by auditors who already accept HSM-rooted custody, but acceptance varies by regulator. MPC exposes per-counterparty audit; address-level visibility, where configured, may limit use to known-counterparty contexts depending on the regulator's view. Resilient Disbursement Rails inverts the disclosure model by minimizing what each party holds; whether a humanitarian regime accepts that posture depends on the donor policy and the destination-country regulator, and legal sign-off would document the minimization and the multi-jurisdiction relay roster. ## Recommendation diff --git a/use-cases/private-government-debt.md b/use-cases/private-government-debt.md index a9851c0..9c96ea6 100644 --- a/use-cases/private-government-debt.md +++ b/use-cases/private-government-debt.md @@ -87,5 +87,5 @@ See [approach-private-bonds.md](../approaches/approach-private-bonds.md) for gen - Related: [private-bonds.md](private-bonds.md) (general bond pattern) - Related: [private-corporate-bonds.md](private-corporate-bonds.md) (higher privacy requirements) -- Emerging market: Municipal debt tokenization gaining traction in Asia +- Asia: the Hong Kong SAR Government issued digital green bonds in 2023, 2024 and November 2025 (HK$10 billion third offering on HSBC Orion, optional e-HKD/e-CNY settlement) ([HKSAR Government](https://www.info.gov.hk/gia/general/202511/11/P2025111100724.htm)); Japan amended the Local Finance Act in 2026 so local governments can issue municipal bonds as blockchain-based digital securities from 1 April 2027, giving issuers real-time holder information ([Cabinet Office summary](https://www.cao.go.jp/bunken-suishin/doc/r07/16ikkatuho_gaiyou.pdf)) - See also: [EPIC map](https://epic-webapp.vercel.app/) (GovTech & EPIC team): treasury transparency, audit trails diff --git a/use-cases/private-money-market-funds.md b/use-cases/private-money-market-funds.md index 26f6602..0a3a170 100644 --- a/use-cases/private-money-market-funds.md +++ b/use-cases/private-money-market-funds.md @@ -73,4 +73,4 @@ See detailed solution architecture and trade-offs in [**Approach: Private Money - Related: [private-stablecoins.md](private-stablecoins.md) (non-yield alternative; settlement cash) - Related: [private-treasuries.md](private-treasuries.md) (corporate treasury use of MMFs) - Differentiation: Unlike stablecoins, money market funds earn yield. Institutions prefer MMFs over non-yield stablecoins for treasury management. -- Market context: Tokenized treasuries/MMFs are among the largest RWA categories outside stablecoins +- Market context: Tokenized U.S. Treasury funds, including Treasury MMFs, are the largest distributed RWA category outside stablecoins: USD 14.8B of USD 38.8B per [rwa.xyz](https://app.rwa.xyz/treasuries) (2026-10-05) diff --git a/use-cases/private-payments.md b/use-cases/private-payments.md index 5cd00ce..407ff2f 100644 --- a/use-cases/private-payments.md +++ b/use-cases/private-payments.md @@ -27,7 +27,7 @@ Business-to-business payment patterns reveal supplier relationships, pricing, an - **Must hide:** Amounts, counterparty identities, payment purpose/memo, timing patterns - **Public OK:** Payment system availability, general network statistics -- **Regulator access:** AML/CFT monitoring, tax reporting, sanctions screening +- **Regulator access:** AML/CFT monitoring, Travel Rule originator and beneficiary information ([FATF R.16, revised June 2025](https://www.fatf-gafi.org/en/publications/Fatfrecommendations/update-Recommendation-16-payment-transparency-june-2025.html)), tax reporting, sanctions screening **Constraints:** @@ -69,7 +69,7 @@ Institutions disbursing grants or payments on the ground (government-to-person t ## 5) Recommended Approaches -See [Approach: Private Payments](../approaches/approach-private-payments.md) for detailed solution architecture covering L1 shielded pools, Plasma/Intmax2 stateless rollups, privacy L2s, TEE, and MPC approaches with quantitative comparison from PoC validation. +See [Approach: Private Payments](../approaches/approach-private-payments.md) for detailed solution architecture covering L1 shielded pools, Plasma/Intmax2 stateless rollups, privacy L2s, TEE, MPC, and Resilient Disbursement Rails, with PoC benchmarks for the L1 shielded pool and stateless Plasma. See also [private-stablecoins.md](private-stablecoins.md) for stablecoin-specific privacy patterns. Additional considerations: @@ -91,7 +91,8 @@ See also [private-stablecoins.md](private-stablecoins.md) for stablecoin-specifi - Related: [private-stablecoins.md](private-stablecoins.md) (stablecoin-specific privacy) - Related: [private-fx.md](private-fx.md) (cross-currency payments) - Related: [private-treasuries.md](private-treasuries.md) (corporate payment context) +- Related: [resilient-disbursement-rails.md](resilient-disbursement-rails.md) (humanitarian disbursement in adversarial jurisdictions) - Reference: [Private Payment PoC](https://github.com/ethsystems/pocs/tree/master/pocs/private-payment) -- Market context: Governments building digital currency infrastructure; cross-border payment networks exploring blockchain alternatives to SWIFT +- Market context: Governments building digital currency infrastructure; cross-border payment networks exploring blockchain settlement, including Swift's own shared-ledger plan ([announced September 2025](https://consensys.io/blog/consensys-scaling-decentralized-finance), prototype by Consensys) - Note: Transaction patterns are highly revealing of business and personal activity - See also: [EPIC map](https://epic-webapp.vercel.app/) (GovTech & EPIC team): G2P payments, aid disbursement diff --git a/use-cases/private-stablecoins.md b/use-cases/private-stablecoins.md index fb45322..a664918 100644 --- a/use-cases/private-stablecoins.md +++ b/use-cases/private-stablecoins.md @@ -32,7 +32,7 @@ Institutions need practical paths to onboard their users (corporates, funds, cou - **Must hide:** transfer **amounts**, **payer/payee identities to non-participants**, and **memos/workflow metadata**; optionally timing/ordering leakage minimised - **Public OK:** existence of a transaction/anchor; contract code; allow-list membership proofs (no PII); attestation schemas - **Regulator access:** **scoped viewing keys** and/or **[attestations](../patterns/pattern-verifiable-attestation.md)** with **access logging**; revocation & rotation policies -- **Settlement:** **Atomic DvP/PvP** across cash↔asset or cash↔cash using [ERC‑7573](https://ercs.ethereum.org/ERCS/erc-7573) semantics; minutes‑level finality OK for pilot +- **Settlement:** **Atomic DvP/PvP** across cash↔asset or cash↔cash using [ERC‑7573](https://ercs.ethereum.org/ERCS/erc-7573) conditional settlement (Draft; atomicity rests on the decryption oracle, and ERC-7573 itself hides no amounts or counterparties); minutes‑level finality OK for pilot - **Ops:** predictable L2 costs; encrypted audit log with L1 anchors; issuer controls (freeze/blacklist) where mandated; KYC holder gating (e.g., [ERC‑3643](https://eips.ethereum.org/EIPS/eip-3643)) **Constraints:** @@ -48,7 +48,7 @@ See detailed solution architecture and trade-offs in [**Approach: Private Paymen **Jurisdiction-Specific Implementations:** - **China:** Stablecoins are out of scope; the state-sanctioned analogue is e-CNY, a centrally operated PBoC system distributed through licensed operator banks rather than a public ledger. Permissioned enterprise chains (BSN) are a separate programme and are not an access channel to e-CNY, so these patterns apply only where an approved operator admits them -- **EU/US:** Licensed stablecoins under MiCA/GENIUS frameworks +- **EU/US:** Licensed stablecoins under MiCA (stablecoin titles apply since 30 June 2024) and the US GENIUS Act (enacted 18 July 2025; takes effect by 18 January 2027 at the latest, implementing rules still in progress) - **Hong Kong:** HKMA-licensed issuers of fiat-referenced stablecoins under the [Stablecoins Ordinance (Cap. 656)](../jurisdictions/hk-crypto-licensing.md); SFC-licensed virtual asset trading platforms for the trading leg ### Non‑Solutions @@ -68,7 +68,7 @@ See detailed solution architecture and trade-offs in [**Approach: Private Paymen ## 7) Notes And Links -- **Standards & Infrastructure:** [ERC‑7573](https://ercs.ethereum.org/ERCS/erc-7573) · [ERC‑3643](https://eips.ethereum.org/EIPS/eip-3643) · [ERC‑5564 Stealth Addresses](https://eips.ethereum.org/EIPS/eip-5564) · [Aztec](https://docs.aztec.network/) · [Zama fhEVM](https://www.zama.ai/post/confidential-erc-20-tokens-using-homomorphic-encryption) · [Fhenix](https://www.fhenix.io/) +- **Standards & Infrastructure:** [ERC‑7573](https://ercs.ethereum.org/ERCS/erc-7573) · [ERC‑3643](https://eips.ethereum.org/EIPS/eip-3643) · [ERC‑5564 Stealth Addresses](https://eips.ethereum.org/EIPS/eip-5564) · [Aztec](https://docs.aztec.network/) · [Zama fhEVM](https://www.zama.org/post/confidential-erc-20-tokens-using-homomorphic-encryption) · [Fhenix](https://www.fhenix.io/) - **Regulatory Frameworks (jurisdiction-specific):** see [jurisdiction](../jurisdictions/) - **Technical Note on Privacy:** FHE implementations (Fhenix, Zama fhEVM) encrypt data-in-use providing **confidentiality** but **not unlinkability**. To hide address linkage and prevent transaction graph analysis, combine with **[ERC-5564 Stealth Addresses](https://eips.ethereum.org/EIPS/eip-5564)** or equivalent unlinkability mechanisms. diff --git a/use-cases/private-treasuries.md b/use-cases/private-treasuries.md index c8b67d4..613bba1 100644 --- a/use-cases/private-treasuries.md +++ b/use-cases/private-treasuries.md @@ -13,6 +13,10 @@ Note: This is corporate treasury management, NOT government securities (treasuri ## 2) Additional Context +- **Group treasuries centralize cash through cash pools and in-house banks.** A physical pool sweeps member balances into a pool leader's account; a notional pool leaves balances in place and the bank aggregates them for interest, with no transfer of funds ([OECD Transfer Pricing Guidance on Financial Transactions](https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/02/transfer-pricing-guidance-on-financial-transactions-inclusive-framework-on-beps-actions-4-8-10_278e0cb3/794bcddd-en.pdf), paras 10.111-10.114). +- **Tax authorities already see the financing structure.** Intra-group loans and cash pooling are priced under the arm's-length principle (OECD Transfer Pricing Guidelines, Chapter X, added 2020). The BEPS Action 13 master file describes how the group is financed and names the entities that provide a central financing function; country-by-country reporting applies to groups with consolidated revenue of EUR 750M or more ([Action 13 final report](https://www.oecd.org/content/dam/oecd/en/publications/reports/2015/10/transfer-pricing-documentation-and-country-by-country-reporting-action-13-2015-final-report_g1g58cf0/9789264241480-en.pdf)). +- **Intragroup cash already moves on bank-operated ledgers.** Mitsubishi Corporation uses J.P. Morgan's permissioned Kinexys Digital Payments for intragroup USD cash management across Singapore, London and New York ([March 2026](https://www.jpmorgan.com/payments/newsroom/mitsubishi-cash-management-kinexys)); the same release reports Kinexys average daily volume above USD 5B across all clients (vendor-reported). J.P. Morgan's JPMD deposit token runs on Base, a public Ethereum L2 ([November 2025](https://www.jpmorgan.com/payments/newsroom/jpm-coin-usd-deposit-token-institutional-clients)), where unshielded transfers are visible to any observer. + ## 3) Actors Corporate Treasury · Subsidiaries · Banks · Auditors · Regulators · Tax Authorities @@ -44,11 +48,11 @@ Aggregate cash positions and treasury investment strategies are competitively se - **Must hide:** Cash balances by entity, investment allocations, yield optimization strategies - **Public OK:** Audited financial statements (periodic, aggregated) -- **Regulator access:** Regulatory capital calculations, liquidity reporting +- **Regulator access:** Auditor and tax-authority access to entity-level balances; regulatory capital and liquidity reporting apply only where a group entity is itself a regulated bank or insurer **Constraints:** -- SEC reporting requirements (for public companies) +- SEC periodic reporting for US public companies (10-K/10-Q, including the liquidity and capital resources discussion in MD&A under Regulation S-K Item 303) - Investment policy constraints - Counterparty credit limits @@ -56,7 +60,7 @@ Aggregate cash positions and treasury investment strategies are competitively se See [approach-private-payments.md](../approaches/approach-private-payments.md) for general payment architecture. Treasury-specific considerations: - Privacy-preserving cash pooling mechanisms -- Integration with [private-money-market-funds.md](private-money-market-funds.md) for yield +- Integration with [private-money-market-funds.md](private-money-market-funds.md) for yield (see [Approach: Private Money Market Funds](../approaches/approach-private-money-market-funds.md)) - Multi-entity identity management with selective disclosure ## 6) Open Questions