Devising modern Fintech solutions to combat global illegal, unreported and unregulated fishing and protect marine ecosystems

Abstract

Illegal, Unreported, and Unregulated (IUU) fishing remains a major threat to marine ecosystems and coastal livelihoods, yet existing enforcement mechanisms rely on periodic inspections, manual reporting, or static financial incentives. We propose a novel closed-loop compliance-to-finance system in which multi-sensor vessel data are transformed into real-time financial signals that directly govern access to capital. In the proposed architecture, heterogeneous onboard and port-side sensors feed into an off-chain AI compliance model whose outputs are transmitted on-chain via decentralized oracle services. These compliance attestations programmatically adjust lending terms in Decentralized Finance (DeFi) protocols, dynamically reducing interest rates and increasing liquidity for compliant operators while restricting capital access for non-compliance. Loans are issued in USD-pegged stablecoins and overcollateralized using real-world fishing assets, including vessels, licenses, quotas, and contracts. Unlike prior approaches that treat sustainability incentives as external subsidies or reputational mechanisms, this system embeds regulatory compliance directly into the cost of capital, creating continuous, automated enforcement with minimum centralized intermediaries. We illustrate the feasibility of this architecture using existing low-cost sensing technologies, oracle infrastructure, and DeFi lending primitives, and discuss its potential to expand sustainable financing in small-scale and low-income fisheries where IUU fishing is most prevalent.