SoK: Web3 RegTech for Cryptocurrency VASP AML/CFT Compliance

• URL: http://arxiv.org/abs/2512.24888v1
• Date: Wed, 31 Dec 2025 14:31:29 GMT
• Title: SoK: Web3 RegTech for Cryptocurrency VASP AML/CFT Compliance
• Authors: Qian'ang Mao, Jiaxin Wang, Ya Liu, Li Zhu, Jiaman Chen, Jiaqi Yan,
• Abstract summary: This paper examines how blockchain-native RegTech solutions leverage distributed ledger properties to enable novel compliance capabilities.<n>We develop three organizing the Web3 RegTech domain: a regulatory paradigm evolution framework across ten dimensions, a compliance protocol taxonomy encompassing five verification layers, and a RegTech lifecycle framework spanning preventive, real-time, and investigative phases.<n>Our analysis reveals critical gaps between academic innovation and industry deployment, alongside persistent challenges in cross-chain tracking, DeFi interaction analysis, privacy protocol monitoring, and scalability.
• Score: 14.435108642393319
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: The decentralized architecture of Web3 technologies creates fundamental challenges for Anti-Money Laundering and Counter-Financing of Terrorism compliance. Traditional regulatory technology solutions designed for centralized financial systems prove inadequate for blockchain's transparent yet pseudonymous networks. This systematization examines how blockchain-native RegTech solutions leverage distributed ledger properties to enable novel compliance capabilities. We develop three taxonomies organizing the Web3 RegTech domain: a regulatory paradigm evolution framework across ten dimensions, a compliance protocol taxonomy encompassing five verification layers, and a RegTech lifecycle framework spanning preventive, real-time, and investigative phases. Through analysis of 41 operational commercial platforms and 28 academic prototypes selected from systematic literature review (2015-2025), we demonstrate that Web3 RegTech enables transaction graph analysis, real-time risk assessment, cross-chain analytics, and privacy-preserving verification approaches that are difficult to achieve or less commonly deployed in traditional centralized systems. Our analysis reveals critical gaps between academic innovation and industry deployment, alongside persistent challenges in cross-chain tracking, DeFi interaction analysis, privacy protocol monitoring, and scalability. We synthesize architectural best practices and identify research directions addressing these gaps while respecting Web3's core principles of decentralization, transparency, and user sovereignty.

Related papers

• Tracking financial crime through code and law: a review of regtech applications in anti-money laundering and terrorism financing [0.0]
  Regulatory technology (RegTech) is transforming financial compliance by integrating advanced information technologies to strengthen anti money laundering and countering the financing of terrorism (AML CFT)<n>Recent literature suggests that such technologies represent more than just an efficiency tool; they mark a paradigm shift in regulation and the evolution of financial oversight.<n>This paper aims to provide a narrative review of recent RegTech applications in financial crime prevention, with a focus on key compliance domains.
  arXiv  Detail & Related papers  (2025-11-19T15:51:08Z)
• Web3 x AI Agents: Landscape, Integrations, and Foundational Challenges [49.69200207497795]
  The convergence of Web3 technologies and AI agents represents a rapidly evolving frontier poised to reshape decentralized ecosystems.<n>This paper presents the first and most comprehensive analysis of the intersection between Web3 and AI agents, examining five critical dimensions: landscape, economics, governance, security, and trust mechanisms.
  arXiv  Detail & Related papers  (2025-08-04T15:44:58Z)
• SoK: Advances and Open Problems in Web Tracking [71.54586748169943]
  Web tracking is a pervasive and opaque practice that enables personalized advertising, and conversion tracking.<n>Web tracking is undergoing a once-in-a-generation transformation driven by shifts in the advertising industry, the adoption of anti-tracking countermeasures by browsers, and the growing enforcement of emerging privacy regulations.<n>This Systematization of Knowledge (SoK) aims to consolidate and synthesize this wide-ranging research, offering a comprehensive overview of the technical mechanisms, countermeasures, and regulations that shape the modern and rapidly evolving web tracking landscape.
  arXiv  Detail & Related papers  (2025-06-16T23:30:54Z)
• Zero-Trust Foundation Models: A New Paradigm for Secure and Collaborative Artificial Intelligence for Internet of Things [61.43014629640404]
  Zero-Trust Foundation Models (ZTFMs) embed zero-trust security principles into the lifecycle of foundation models (FMs) for Internet of Things (IoT) systems.<n>ZTFMs can enable secure, privacy-preserving AI across distributed, heterogeneous, and potentially adversarial IoT environments.
  arXiv  Detail & Related papers  (2025-05-26T06:44:31Z)
• From Data Behavior to Code Analysis: A Multimodal Study on Security and Privacy Challenges in Blockchain-Based DApp [1.6081378516701994]
  The recent proliferation of blockchain-based decentralized applications (DApp) has catalyzed transformative advancements in distributed systems.<n>This study initiates with a systematic analysis of behavioral patterns derived from empirical DApp datasets.<n>The principal security vulnerabilities in vulnerability-based smart contracts developed via Solidity are then critically examined.
  arXiv  Detail & Related papers  (2025-04-16T08:30:43Z)
• CyberNFTs: Conceptualizing a decentralized and reward-driven intrusion detection system with ML [0.0]
  The study employs an analytical and comparative methodology, examining the synergy between cutting-edge Web3 technologies and information security. The proposed model incorporates blockchain concepts, cyber non-fungible token (cyberNFT) rewards, machine learning algorithms, and publish/subscribe architectures.
  arXiv  Detail & Related papers  (2024-08-31T21:15:26Z)
• On Replacing Cryptopuzzles with Useful Computation in Blockchain Proof-of-Work Protocols [0.12289361708127873]
  Researchers have been pursuing the idea of replacing cryptopuzzles with useful computing tasks for over a decade. We provide insight into the effect of introducing "usefulness" and of transitioning to task classes other than cryptopuzzles. We discuss pertinent techniques and present research gaps in the current state-of-the-art.
  arXiv  Detail & Related papers  (2024-04-24T08:49:41Z)
• Enhancing Trust and Privacy in Distributed Networks: A Comprehensive Survey on Blockchain-based Federated Learning [51.13534069758711]
  Decentralized approaches like blockchain offer a compelling solution by implementing a consensus mechanism among multiple entities. Federated Learning (FL) enables participants to collaboratively train models while safeguarding data privacy. This paper investigates the synergy between blockchain's security features and FL's privacy-preserving model training capabilities.
  arXiv  Detail & Related papers  (2024-03-28T07:08:26Z)
• Enhancing Security in Blockchain Networks: Anomalies, Frauds, and Advanced Detection Techniques [1.880279363603234]
  Despite its advantages, blockchain networks are susceptible to anomalies and frauds, posing significant risks to their integrity and security. This paper offers a detailed examination of blockchain's key definitions and properties, alongside a thorough analysis of the various anomalies and frauds that undermine these networks. It describes an array of detection and prevention strategies, encompassing statistical and machine learning methods, game-theoretic solutions, digital forensics, reputation-based systems, and comprehensive risk assessment techniques.
  arXiv  Detail & Related papers  (2024-02-17T09:27:30Z)
• Generative AI-enabled Blockchain Networks: Fundamentals, Applications, and Case Study [73.87110604150315]
  Generative Artificial Intelligence (GAI) has emerged as a promising solution to address challenges of blockchain technology. In this paper, we first introduce GAI techniques, outline their applications, and discuss existing solutions for integrating GAI into blockchains.
  arXiv  Detail & Related papers  (2024-01-28T10:46:17Z)
• Detecting Anomalous Cryptocurrency Transactions: an AML/CFT Application of Machine Learning-based Forensics [5.617291981476445]
  The paper analyzes a real-world dataset of Bitcoin transactions represented as a directed graph network through various techniques. It shows that the neural network types known as Graph Convolutional Networks (GCN) and Graph Attention Networks (GAT) are a promising AML/CFT solution.
  arXiv  Detail & Related papers  (2022-06-07T16:22:55Z)
• Regulation conform DLT-operable payment adapter based on trustless - justified trust combined generalized state channels [77.34726150561087]
  Economy of Things (EoT) will be based on software agents running on peer-to-peer trustless networks. We give an overview of current solutions that differ in their fundamental values and technological possibilities. We propose to combine the strengths of the crypto based, decentralized trustless elements with established and well regulated means of payment.
  arXiv  Detail & Related papers  (2020-07-03T10:45:55Z)

This list is automatically generated from the titles and abstracts of the papers in this site.

This site does not guarantee the quality of this site (including all information) and is not responsible for any consequences.