# A Roadmap to Compliance and Security: Making Public Blockchains Enterprise-Ready

For compliance-focused business leaders, blockchain technology presents a paradox. On one hand, it offers transformative potential for unlocking new markets and removing barriers to accessing financial services. On the other, it comes fraught with challenges such as regulatory uncertainty, security vulnerabilities, and complex, interconnected dependencies. The solution to unlock the full potential of blockchain based finance is a robust routing and policy layer, designed to make applications more secure, compliant, and effective.

In this article, Shield3 and Blockscience present both an architecture for building this layer, and a instrumenting to meet the needs of enterprises building blockchain based applications.

## Elevating the Status of Blockchain for Enterprise Applications

While blockchain and smart contracts define a foundation of *permissible* actions, they do not guide users toward actions that are strategically *optimal* or compliant with existing regulations. This is not a flaw in blockchains, as they are intended to be open and permissionless by design. However this presents major challenges for the **business leaders** wanting to offer blockchain based applications, **implementers** charged with deploying these applications, and **compliance teams** working to mitigate compliance and security risks.

This is where the concept of a routing and policy layer becomes critical. Acting as the operational "brains," this layer resides above the blockchain, navigating complex transactions, enriching them with necessary context, and enforcing compliance and security protocols.


The integration of such an intelligent layer enables the next-generation of financial applications that adhere to regulatory standards and scale efficiently, all without compromising the decentralized nature of blockchain technology.

### Digital Banking and Payments

In order to build accessible blockchain based banking applications, a company needs to be able to consumers are protected from both targeted attacks and systemic risks that come from using public blockchains, while also ensuring they meet the compliance regulations of the markets in which they operate. This can be achieved through a combination of tailored AI models, expert systems, anomaly detection algorithms, and threat detection.

**Challenges Addressed:** (TODO detail)
- Regulatory Landscape Navigation with policies built to ensure compliance with specific markets
- Mitigation of Smart Contract Risks through monitoring for vulnerabilities, logic changes
- Counteraction of Phishing and Fraud Attempts
- Improving UX through anomaly detection and unobtrusive alerts to users

### Investment Platforms and Decentralized Exchanges

Investing and trading on blockchains presents immense potential and access to sophisticated financial instruments. However there are also complex risks due to the adversarial nature of how transactions are broadcast and ordered. Here, the routing and policy layer augments the strategy of the investor, and understands the nuances of transaction execution to achieve optimal outcomes.

**Challenges Addressed:** (TODO detail)
- Elimination of Transaction Exploitability through transaction routing policies
- Regulating Automated Trading Strategies

## Compliance Oriented Automation

The inclusion of a routing and policy layer provides financial systems with an intelligent overseer that comprehends the context, objectives, and legal parameters within which it operates. It offers continuous monitoring to ensure applications stay within operational and regulatory frameworks. This provides the essential audit trails and visibility that compliance-focused enterprises require.


### Responsibly Integrating Intelligence

The system is further improved by a pipeline for injecting AI based policies into the decision making workflow, and continuously monitoring the events to ensure alignment with the intended objectives and compliance requirements. The feedback system also provides engineers and policy designers a way to iterate and improve models.


For enterprises that have held off on embracing blockchain technology due to compliance and security concerns, the addition of this innovative layer could be a game-changer. It offers a way to engage with blockchain technology, equipped with the tools for robust compliance and unparalleled security, realizing a new era in financial infrastructure.

### Realized through a partnership between Shield3 and Blockscience

* Developing new policies as needed by the stakeholders
* Operating them on Shield3's stack

CTA: reach out for access

## About Shield3

Shield3 is a transaction gateway with security & compliance built-in.Shield3 provides enterprises with an invisible proxy which executes tailored workflows to analyze, understand, and optimally route transactions for crypto applications.

## About Blockscience

Blockscience is a worldwide leader at designing policies & controls systems