Global Institutions Publish Tokenized Asset Compliance Blueprint
A group of central banks, international institutions, and financial firms contributed to a Global Layer One (GL1) white paper on programmable compliance for tokenized financial assets. The paper examines how compliance controls can be embedded into regulated digital-asset transactions.
Contributors to the paper include Banque de France; the International Monetary Fund (IMF); Kinexys by J.P. Morgan, the bank’s blockchain and digital-assets division; the Monetary Authority of Singapore (MAS); and Standard Chartered.
Additional input came from Bermuda, a privacy protocol for regulated digital assets, as well as the BIS Innovation Hub, the innovation arm of the Bank for International Settlements (BIS); Chainlink Labs, a blockchain infrastructure provider; GLEIF, the Global Legal Entity Identifier Foundation; and other industry participants.
“For regulated institutions, full public-chain transparency is often incompatible with commercial confidentiality and client privacy,” the announcement by Bermuda states. The company said its contribution to the GL1 paper focuses on privacy-preserving compliance tools that allow asset- and transaction-level policies to be enforced in private digital-asset activity. Bermuda noted:
“Every transaction can expose counterparties, amounts, and asset types. But the alternative, full opacity, can leave issuers and regulators with blunt enforcement tools.”
“When action is required, the only available lever may be to freeze an entire pool, affecting compliant funds and legitimate users alongside illicit activity,” the announcement adds.
Market participants must balance regulatory oversight with commercial confidentiality, especially where transaction data may be visible across blockchain networks. The GL1 paper outlines an architecture intended to support compliance controls while preserving privacy in regulated digital-asset activity.
Institutional Tokenization Efforts Highlight Growing Focus on Programmable Compliance
The GL1 paper includes Bermuda as a privacy solution for enforcing asset- and transaction-level policies in private digital-asset transactions. According to the paper, issuers can apply compliance rules before transfers, swaps, or settlements occur, while maintaining confidentiality through privacy-preserving technologies.
The framework explores how tools such as zero-knowledge proofs can support regulatory requirements without exposing sensitive transaction data. Contributors argue that this approach can help regulated institutions balance commercial confidentiality with enforceability in tokenized asset markets.
Jan Philipp Fritsche, co-founder of Bermuda and former European Central Bank official, said:
“Enforcement needs precision. Recent incidents have shown what happens when precision is missing: issuers can be forced into blunt measures that risk freezing an entire protocol and the compliant users inside it.”
In an interview with Bitcoin.com News, Fritsche said the digital asset industry needs compliance tools that can distinguish high-risk activity from legitimate transactions. He argued that privacy-preserving technologies and compliance enforcement can work together, allowing issuers to apply targeted restrictions without affecting compliant participants. Bermuda said its protocol uses client-side zero-knowledge proofs and operates on EVM-compatible networks without requiring contract rewrites.
