Leading central banks, financial institutions, and blockchain firms contributed to the Global Layer One (GL1) white paper on programmable compliance, which outlines a compliance architecture for tokenized financial assets and regulated digital-asset transactions. Contributors include the IMF, Banque de France, J.P. Morgan’s Kinexys unit, and the Monetary Authority of Singapore.
“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.
Institutional Tokenization Efforts Highlight Growing Focus on Programmable ComplianceThe 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.”
