University of Exeter experts have joined a new international project to help people follow financial rules and laws without giving away personal data
Researchers from 11 countries are taking part in PETs4DeFi, a three-year Horizon Europe-funded project to build tools to protect privacy lawfully during decentralised finance processes.
Decentralised finance lets people lend, borrow and trade without a bank. But most transactions on a public blockchain can be seen by anyone, which exposes personal and business information. Tools that hide transactions often work without any checks, and criminals can misuse them. Users, companies and regulators therefore face a hard choice between privacy and compliance.
PETs4DeFi, coordinated at Aston University, will show that this choice is not needed. Experts will use zero-knowledge proofs, secure multi-party computation and post-quantum cryptography to help people prove they have passed identity and anti-money-laundering checks without revealing who they are. The tools will be tested in pilots covering lending, decentralised exchanges, NFT platforms, decentralised organisations (DAOs) and digital identity wallets, and the results will be shared as open-source software, developer kits and guidance for supervisors.
The University of Exeter is playing a leading role in PETs4DeFi by embedding legal, ethical and regulatory safeguards into the development of next-generation decentralised finance technologies, helping to make them both innovation-driven and regulator-ready from the outset.
Professor Umut Turksen who leads University of Exeter's work in PETs4DeFi, said: "The University of Exeter will lead the project's legal, ethical and regulatory research, ensuring that privacy-enhancing technologies for decentralised finance are developed in a way that safeguards fundamental rights while meeting European requirements on data protection, anti-money laundering and financial compliance. Our team will work closely with technical partners to embed privacy-by-design and compliance-by-design principles throughout the project and to provide evidence-based guidance for regulators and policymakers.
"We expect PETs4DeFi to demonstrate that privacy and regulatory compliance are not competing objectives but can be achieved together through innovative technologies. By delivering trusted and compliant solutions for decentralised finance, the project has the potential to strengthen Europe's leadership in digital finance, cybersecurity and privacy-preserving innovation."
Dr Bogdan Adamyk, Principal Investigator of PETs4DeFi at Aston Business School, which coordinates the project, said: "People should not have to choose between their privacy and the rules that protect everyone in finance. PETs4DeFi will show that both are possible. Our consortium brings together cryptographers, lawyers, economists, engineers and security practitioners, and that mix is what makes this work possible."
The consortium includes six universities and research centres, nine technology companies, a security practitioner platform and a professional body. Over the next 36 months the partners will define requirements and architecture, build prototypes and test them in pilots, with first results expected during the first year.
