# KYC with ZK Proofs

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### Rethinking KYC for Crypto-Native Systems

As crypto ecosystems expand, the pressure to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations continues to grow. However, traditional KYC methods rely on direct collection and storage of sensitive user data (government IDs, selfies, documents) typically held by centralized services. These approaches directly conflict with the principles of decentralization, self-custody, and user privacy.

This creates a growing tension. Builders are asked to choose between two extremes: either ignore compliance entirely or require invasive identity checks that compromise user trust and introduce new attack surfaces.

But there’s a third option emerging—one that offers both compliance and privacy.

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### The Role of Zero-Knowledge Proofs in Identity Verification

Zero-knowledge proofs (ZKPs) allow a user to prove that a statement is true without revealing the underlying data. For KYC and identity use cases, ZKPs enable users to prove facts about themselves—like being over 18, not being on a sanctions list, or having passed a compliance check—**without exposing any personal information.**

A typical ZK KYC flow looks like this:

1. The user completes an identity verification process with a compliant off-chain provider.
2. Instead of exposing identity data, the user receives a cryptographic proof representing the fact that their identity has been verified.
3. This proof can be submitted alongside transactions, smart contract interactions, or automated agent logic to prove compliance requirements are met.

No documents are uploaded. No identity is revealed. Yet the verification is cryptographically sound.

***

### Use Cases for ZK-Based KYC

#### Agent Access Control

Autonomous agents—used in trading, automation, or protocol interaction—may be required to meet certain regulatory standards. Instead of tying them to verified accounts or exposing user details, ZK proofs allow these agents to carry compliance credentials without compromising privacy.

For example, an agent could be programmed to only activate if the owner has passed a sanctioned identity verification process. The ZK proof is passed as part of the task payload, verified during execution, and logged in an auditable but anonymized trail.

#### Permissioned DeFi and DAO Governance

Protocols introducing partial compliance gates such as token sales, liquidity provision, or treasury access can use ZK KYC as a condition for interaction. Rather than maintaining a list of verified addresses or disclosing user identity, participants submit cryptographic proofs showing they meet the required conditions (jurisdiction, accreditation, etc.).

This allows permissioned actions without centralizing identity or doxxing wallets.

#### Regulatory Auditability

Even though no user data is revealed, cryptographic attestations can confirm that KYC procedures were followed. These logs can be reviewed by auditors, regulators, or counterparties to ensure that compliance occurred, without exposing sensitive details.

This creates a form of **privacy-preserving auditability**: verified enforcement without surveillance.

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### Example Workflow

Here’s how a ZK KYC-enabled task might work for an on-chain agent:

```ts
const task = {
  strategy: "stablecoinArb",
  inputs: {
    asset: "USDC",
    amount: 10000,
    zkKYCProof: "zkp_0x6a4d9..."
  }
};
```

Inside the execution environment:

```ts
const isValid = await verifyZKProof(task.inputs.zkKYCProof);

if (!isValid) {
  throw new Error("KYC requirement failed");
}

// Continue with strategy execution...
```

This logic ensures that the agent only runs if the KYC proof is valid—without ever exposing the user's real-world identity or tying it to a wallet address.

***

### Compliance Without Compromise

As the crypto world moves closer to mainstream adoption, it’s clear that regulatory alignment is necessary. But how that alignment is achieved will shape the future of decentralized systems.

Zero-knowledge KYC offers a new model. One where identity can be proven without being shared. Where agents and users can comply without giving up privacy. And where automation and anonymity no longer have to be in conflict.

***

#### **Add KYC to Your App with Treza**

[**GitHub**](https://github.com/treza-labs)\
Start building with Treza’s open-source libraries and examples.

[**Treza SDK**](https://github.com/treza-labs/treza-sdk)\
Create secure enclaves and run your application privately inside Docker containers.

[**Add KYC to Your App with Treza**](https://github.com/treza-labs/treza-contracts/tree/main/contracts/compliance)\
Private, zero-knowledge identity verification for KYC/AML.
