Global institution releases compliance blueprint for tokenized assets
A group of central banks, international organizations, and financial companies contributed to global monetary policy. layer 1 (GL1) White Paper on Programmable Compliance for Tokenized Financial Assets. This paper considers how compliance controls can be incorporated into regulated digital asset transactions.
Contributors to this paper include Banque de France; International Monetary Fund (IMF). Kinexys is the blockchain and digital assets division of JPMorgan Bank. Monetary Authority of Singapore (MAS); and Standard Chartered.
Additional input came from Bermuda, a regulated digital asset privacy protocol, and the BIS Innovation Hub, the innovation arm of the Bank for International Settlements (BIS). Chainlink Labs, blockchain infrastructure provider. GLEIF, Global Corporate Identification Foundation. and other industry participants.
“For regulated institutions, full public chain transparency is often incompatible with commercial confidentiality and customer privacy,” Bermuda’s announcement said. The company said its contributions to the GL1 document focus on privacy protection compliance tools that enable the enforcement of asset-level and transaction-level policies in private digital asset activities. Bermuda pointed out that:
“Every trade could reveal the counterparty, amount, and type of assets. But the alternative to total opacity could give issuers and regulators a blatant enforcement tool.”
“If action is necessary, the only recourse available is to freeze the entire pool, which could impact compliant funds and legitimate users along with illegal activities,” the announcement added.
Market participants must balance regulatory oversight with commercial confidentiality, especially when transaction data may be visible across blockchain networks. The GL1 paper outlines an architecture aimed at supporting compliance management while protecting privacy in regulated digital asset activities.
Tokenization efforts by institutions highlight growing focus on programmable compliance
The GL1 document includes Bermuda as a privacy solution for enforcing asset-level and transaction-level policies in private digital asset transactions. According to the paper, issuers can enforce compliance rules before transfers, exchanges, and payments occur, while maintaining confidentiality through privacy protection technology.
This framework considers 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 and enforcement in tokenized asset markets.
Bermuda co-founder and former European Central Bank official Jan-Philippe Fritsche said:
“Enforcement requires precision. Recent incidents show what happens when precision is lacking. Issuers can be forced into blatant measures that risk freezing the entire protocol and the compliant users within it.”
In an interview with Bitcoin.com News, Fritsche said the digital asset industry needs compliance tools that can distinguish between high-risk activities and legitimate transactions. He argued that privacy protection technology and compliance enforcement can work together to enable issuers to apply targeted restrictions without impacting compliance participants. Bermuda said its protocol uses client-side zero-knowledge proofs and operates on EVM-compatible networks without the need for contract rewriting.
