Director Chua Tju Liang and Associate Director Ulanda Oon featured in ALB on Zero-knowledge proof digital IDs
26 Nov 2025
Head of Blockchain & Digital Assets Practice Chua Tju Liang and Associate Director Ulanda Oon were quoted in an Asian Legal Business (ALB) article titled, “Singapore faces cross-border DeFi identity verification challenge.” The article discusses the regulatory challenges facing Singapore's virtual asset hub as global regulators, particularly the U.S. Treasury, explore zero-knowledge proofs (ZKPs) for identity verification in decentralised finance (DeFi).
As explained by Tju Liang and Ulanda, “Zero-knowledge Proofs are advanced cryptographic protocols that allow one party to prove the validity of a statement to another party without revealing any underlying data…ZKPs enable users to demonstrate compliance with certain requirements (such as age, residency, or KYC status) without sharing their full personal information."
The U.S. Treasury, guided by the GENIUS Act, is actively exploring mandating digital ID verification (potentially using ZKPs) at the infrastructure level for DeFi transactions. This contrasts with Singapore's regulatory framework under MAS Notice PSN02, which requires payment service providers to collect and verify traditional, underlying identification documents (full name, ID number, address, etc.).
Tju Liang and Ulanda highlight the direct implications for Singapore-based clients, “If the U.S. Treasury's proposal to mandate digital ID verification…comes to fruition … Singapore-based clients serving U.S. users may have to adopt a cumulative approach towards complying with the requirements of both jurisdictions." This means that even if ZKPs can address the primary purpose of identification checks for money laundering and sanctions compliance, "the current obligation under the MAS Notice PSN02 still requires such payment service providers to collect underlying identification documents, resulting in a cumulative (i.e. dual) compliance requirement."
The integration of ZKP-based digital ID is compatible with relevant Singapore’s existing KYC procedures as the former requires the initial verification of KYC information (Traditional Onboarding Phase) before a relevant digital identity credential (identity credential) may be issued to the relevant user’s wallet. By using verifiable encryption as part of the Traditional Onboarding Phase, the user can submit personally identifiable information (PII), to such extent and in such form as required under Singapore law, to an issuer of the identity credential, which is a specific trusted party.
Tju Liang and Ulanda note the advantage of this system, “Through this hybrid approach, while PII may still be collected during the Traditional Onboarding Phase to ensure compliance with regulatory requirements imposed under Singapore law, such ZKP integration can help service providers minimise the amount of PII they access or process during routine transactions…”
According to Tju Liang and Ulanda, it is “a priority for financial institutions to consider how existing obligations for AML/CFT compliance, and protection of personal data might interact with ZKP-based identity verification approaches”. They recommend that Singapore-based financial institutions prepare for potential future conflicts by “closely monitoring developments from MAS, international standard-setters, including the Financial Action Task Force, and key foreign regulators.”
You may read the full article on p.9 of ALB November 2025 issue here or on ALB’s website here.