A Multi-Party Collaboration Framework for Regulatory Compliance for Smart Contract Systems

Abstract

The increasing adoption of blockchain (BC) and smart contracts (SCs) in the financial sector necessitates effective regulatory compliance solutions that align with the decentralized nature of these systems. Existing centralized approaches to regulatory compliance face challenges in keeping pace with the rapidly evolving technology, creating potential gaps in enforcement. This paper proposes a MultiParty Collaboration Framework (MPCF) for Regulatory Compliance for SC Systems, a novel decentralized approach to integrating regulatory compliance directly into BC-based financial systems. This framework enables multi-party collaboration and enforces compliance with various regulatory requirements while preserving the core principles of decentralization. We present the design principles of the framework, its implementation and use cases. We also discuss the challenges, limitations, potential extensions, and future research directions. Our work contributes to the ongoing efforts to develop more robust and adaptable regulatory frameworks for BC-based financial systems, fostering innovation while ensuring compliance.