zkFabLedger: Enabling Privacy Preserving and Regulatory Compliance in Hyperledger Fabric

Abstract

Preserving the privacy of transactions and ensuring the regulatory compliance of transactions are two important requirements for blockchain-based financial applications. However, these two requirements are somewhat contradictory. Techniques for protecting transaction privacy, such as data encryption and zero-knowledge proof, generally make it difficult to regulate and audit the transactions. In this paper, we propose a system named zkFabLedger which enhances both the privacy and the auditability of the classic permissioned blockchain platform Hyperledger Fabric. The proposed system utilizes commitments and non-interactive zero-knowledge proofs to hide the detailed information of transactions while enabling the endorsing peer nodes to verify the regulatory compliance of transactions. Transactions are recorded on table-structured ledgers, so that the regulator can perform complex auditing of transactions. Moreover, we utilize the ring signature scheme and the secret handshake protocol to ensure the anonymity of the transaction sender while enabling the regulator to trace the sender’s identity. Simulation results demonstrate that the proposed system can balance well between privacy, regulation and efficiency.