Money clears the border. Trust gets detained.
A payment crosses a network and a jurisdiction in seconds, but the controls that made it trustworthy stay behind. Drawing on BIS Projects Mandala and Tamga, a proposal for when a verified proof should count as examination evidence.
By Dr Ksenia Shnyra · Lewis Tuff
Abstract
A payment can cross an institution, a network and a jurisdiction in seconds, but the controls that made it trustworthy do not travel with it. Institutional tokenized volume concentrates inside perimeters where one operator answers every question; once an asset crosses a boundary, eligibility, permissions and customer verification are re-established from scratch. BIS Project Mandala shows privacy-preserving compliance proofs can be generated and Project Tamga is exploring how they can be verified across systems, yet a review of SEC rules and no-action materials, federal banking guidance, FinCEN rulemakings, FATF Recommendations, the EU AML package and MiCA found no framework under which a verified proof may stand as sufficient examination evidence that an obligation was met. The paper proposes a narrow supervised pilot, split across SEC exemptive authority under Exchange Act Section 36, FinCEN authority under 31 U.S.C. 5318(a)(7) and the GENIUS Act rulemaking, to test when a verified proof should be accepted for regulatory reliance.
In this paper
- 01The pattern in the volume
- 02Why the boundary holds
- 03Proof, verification, and reliance
- 04Travel Rule: partial portability
- 05The regulatory gap
- 06A pilot that can fail
- 07Two supervisory changes