Our Approach to Compliant Privacy

Encifher is a privacy engine built for responsible DeFi. We enable encrypted transactions while staying aligned with international compliance standards. Our goal is simple: protect user privacy while keeping the ecosystem safe and sustainable.

We believe that for crypto to reach mainstream adoption, regulation, compliance, and privacy must go hand in hand. Privacy tools cannot ignore compliance, and compliance solutions cannot sacrifice user privacy.

Compliance v1

Our first version of compliance focuses on proactive wallet screening and sanctions controls:

• Geo-blocking: Access is restricted from OFAC-sanctioned jurisdictions.
• Pre-transaction screening: Every wallet connecting to Encifher is checked against registries (e.g. TRM, Chainalysis) for sanctions, money laundering, terror financing, hacks, darknet markets, scams, and fraud.
• Direct & indirect exposure checks: We identify both direct hits (sanctioned wallets) and close counterparties (1-hop exposure).
• Periodic broader checks: For higher-value deposits, Encifher runs extended monitoring (multi-hop checks) to provide institutions with stronger safety guarantees.

For users, these checks happen off-chain and in the background, ensuring that their transactions remain encrypted and private on-chain while the venue remains safe and compliant.

The Future of Compliance

Today’s screening providers lack accountability — false positives or missed addresses carry no financial consequence. Encifher is working to fix this.

We are building towards on-chain compliance attestation in partnership with Predicate, which introduces:

• On-chain policy logic: Compliance tolerance levels are set transparently.
• Operator accountability: Screening operators underwrite their decisions, attesting wallets on-chain.
• Slashing incentives: Incorrectly flagged or misclassified wallets can lead to financial penalties.

This system ensures that compliance data becomes verifiable, transparent, and accountable, while users continue to enjoy low-latency private transactions.

Encifher will be among the first adopters of Predicate’s on-chain compliance framework on Solana.

Privacy With Accountability

We recognize the fine balance:

• Users deserve privacy if they are acting lawfully — their strategies, earnings, and payments should not be exposed by default.
• Regulators deserve accountability — if there is legitimate legal cause, encrypted records can be reviewed in a secure, auditable way.

Our model mirrors the best of Web2 financial systems: day-to-day privacy is preserved, but oversight mechanisms exist to keep the system safe from abuse.