A Private Smart Wallet with Probabilistic Compliance (2506.04853v1)

Abstract: We propose a privacy-preserving smart wallet with a novel invitation-based private onboarding mechanism. The solution integrates two levels of compliance in concert with an authority party: a proof of innocence mechanism and an ancestral commitment tracking system using bloom filters for probabilistic UTXO chain states. Performance analysis demonstrates practical efficiency: private transfers with compliance checks complete within seconds on a consumer-grade laptop, and overall with proof generation remaining low. On-chain costs stay minimal, ensuring affordability for all operations on Base layer 2 network. The wallet facilitates private contact list management through encrypted data blobs while maintaining transaction unlinkability. Our evaluation validates the approach's viability for privacy-preserving, compliance-aware digital payments with minimized computational and financial overhead.