Fairblock is designed so transaction confidentiality does not remove the controls expected by institutional payment infrastructure. Addresses and transaction relationships remain traceable. Only transaction amounts are encrypted. The compliance model combines four independent layers: perimeter screening, protocol-level containment, issuer-level enforcement, and narrowly scoped selective disclosure.

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1. Perimeter Screening

Fairblock can support USDC, USDT, PYUSD, and other stablecoins or tokenized assets. At the deposit and withdrawal boundary, Fairblock can integrate compliance and blockchain-risk providers such as Predicate or Range Security. The relevant transparent address can be screened for:
  • Sanctions exposure
  • Stolen or hacked funds
  • Illicit-finance exposure
  • Known compromised addresses
  • Other configured risk signals
This screening occurs before assets enter or leave Fairblock’s confidentiality contract, allowing known high-risk transactions to be rejected at the perimeter. For assets such as USDC, USDT, and PYUSD, the underlying issuer already maintains its own compliance and freeze controls. Fairblock’s screening is an additional layer rather than a replacement for those controls. This is particularly useful because issuer-level blocklists may differ in scope or response timing, especially for newly identified hacked or stolen funds. Fairblock can therefore reduce the risk of problematic assets entering the shared confidentiality contract before the underlying issuer takes action. This model is consistent with how neobanks, exchanges, payment processors, custodians, and other applications that accept stablecoins typically approach compliance. These platforms do not generally treat the absence of an issuer-level freeze as sufficient evidence that funds are acceptable. They apply their own transaction-monitoring and risk policies to deposits and withdrawals, often combining blockchain analytics with customer-level controls. Fairblock follows the same principle. The issuer’s controls remain an independent asset-level backstop, while Fairblock applies its own application-level screening to assets entering or leaving the confidential system. Confidentiality therefore does not create a separate compliance model; Fairblock extends the same layered controls used by institutional stablecoin applications into a system where transaction amounts are private by default.

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2. Protocol-Level Containment

Fairblock also includes controls for risk identified after assets have entered the confidential state. If an address is subsequently identified by a compliance provider, asset issuer, institutional counterparty, or relevant authority, an authorized Fairblock administrator can restrict that specific confidential account. The administrator can:
  • Freeze the account and prevent further confidential transfers, or
  • Where permitted by the underlying asset, force the balance to withdraw to the transparent address cryptographically bound to that confidential account
The administrative authority is deliberately narrow. It cannot transfer user assets to Fairblock, another user, or an arbitrary wallet. It can only restrict activity or return assets to the user’s own bound address. This allows Fairblock to contain identified risk without giving the administrator general custody or discretionary control over user funds. If the underlying asset issuer has already frozen the user’s transparent address, the balance can remain frozen inside Fairblock pending resolution rather than being redirected elsewhere.

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3. Underlying Asset Enforcement

For assets with native issuer-level controls, the underlying asset remains an additional independent enforcement layer. Examples include:
  • Circle for USDC
  • Tether for USDT
  • Paxos for PYUSD
  • Issuers of other stablecoins or tokenized assets that support address freezes, transfer restrictions, or similar controls
Fairblock therefore does not rely on a single compliance mechanism. The system combines:
  • Application-level screening before deposits and withdrawals
  • Fairblock’s own account-level freeze and forced-withdrawal controls
  • The underlying asset issuer’s native enforcement capabilities
These layers are complementary and provide multiple opportunities to prevent or contain prohibited activity.

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4. Traceability and Selective Disclosure

Fairblock does not make transaction relationships opaque. Addresses remain traceable and the transaction graph remains visible, while transfer amounts are encrypted. This preserves the ability to understand which addresses interacted while protecting commercially and financially sensitive transaction values. Where an authorized investigation requires additional visibility, Fairblock’s Identity-Based Encryption-enabled selective disclosure system can reveal the relevant encrypted amounts. Disclosure is granular rather than system-wide. Access can be scoped to the specific:
  • User or set of users
  • Application
  • Time period
  • Investigation scope
Fairblock therefore does not need to proactively distribute a standing system-wide decryption key to compliance providers or other third parties. Disclosure access can instead be generated only for the requested scope, allowing relevant transaction amounts to be reconstructed without exposing unrelated users or activity.

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End-to-End Model

A typical transaction begins with a transparent address being screened before assets are accepted into Fairblock. Once deposited, users can transact inside the confidential state while addresses and transaction relationships remain traceable and amounts remain encrypted. If an address is identified as high-risk after deposit, Fairblock can freeze that account or, where permitted, return the balance to the user’s cryptographically bound transparent address. Before withdrawal, the relevant transparent address can be screened again. The underlying stablecoin or tokenized-asset issuer remains an additional asset-level enforcement backstop. If further investigation is required, Fairblock’s selective disclosure system can provide narrowly scoped access to the relevant encrypted amounts.