a16z Seeks to Disrupt Permissioned Blockchain Assumptions

a16z crypto has challenged the conventional wisdom that permissioned blockchains are necessary to meet U.S. anti-money laundering (AML) and sanctions requirements.

The firm argues that existing laws focus on risk management rather than eliminating all potential exposure, allowing financial institutions to operate on permissionless blockchain networks while meeting regulatory requirements.

a16z's proposed framework includes key controls such as KYC, wallet screening, transaction monitoring, sanctions controls, and third-party risk management at multiple layers.

The paper addresses concerns surrounding public blockchains, including the visibility of transaction data, by highlighting cryptographic techniques that can allow institutions to prove specific facts without revealing underlying data.