FC-GUARD: Enabling Anonymous yet Compliant Fiat-to-Cryptocurrency Exchanges
This work addresses the privacy risks inherent in existing fiat-cryptocurrency exchange platforms, which often leak linkages between user identities and on-chain addresses, thereby compromising anonymity. To reconcile privacy protection with regulatory compliance, the paper proposes a novel exchange system that operates under a “default anonymity, auditable on demand” paradigm. By decoupling user identities from blockchain addresses while supporting lawful de-anonymization for KYC and tax auditing purposes, the system leverages verifiable credentials and zero-knowledge proofs to conceal users’ identities and fiat account details. Authorized entities can nevertheless audit suspicious or non-compliant activities when necessary. A functional prototype has been implemented on both desktop and mobile platforms, and experimental evaluation demonstrates the system’s practical feasibility in simultaneously achieving strong privacy guarantees and regulatory compliance.