In 2026, the US SEC's move toward the CLARITY Act has forced a technical "reckoning" for privacy protocols. To satisfy the "selective disclosure" and "reporting obligations" inherent in US securities law, Dusk utilizes a specific stack of Zero-Knowledge (ZK) standards that allow it to act as a "Reporting-Ready" network.
Here are the technical standards Dusk uses to meet SEC-level disclosure requirements:
1. PLONK (The Universal Proof System)
Dusk uses PLONK (Permutations over Lagrange-bases for Oecumenical Noninteractive arguments of Knowledge) as its primary ZK-SNARK proof system.
* Why the SEC Cares: Unlike older SNARKs, PLONK features a "universal and updateable" trusted setup. This means the SEC (or any designated auditor) can verify the integrity of the setup once, ensuring the protocol hasn't been backdoored, without needing a new "ceremony" for every update.
* Selective Disclosure: PLONK allows Dusk to separate "private inputs" (user data) from "public statements" (compliance status). A user can prove to the SEC that "the sender is a US-accredited investor" without revealing the sender’s Social Security Number.
2. The XSC Standard (Confidential Security Contracts)
The XSC (eXtensible Security Contract) is Dusk’s equivalent to Ethereum's ERC-20, but built for regulated securities.
* The Disclosure Mechanism: XSC contracts include a native "Auditor Key" (or View Key) slot. When a security is issued on Dusk, the issuer can provide the SEC or a third-party auditor with a cryptographic key that grants "read-only" access to specific transaction histories for that specific asset.
* Impact: This satisfies the SEC's requirement for "Books and Records" under the Investment Advisers Act of 1940, allowing for real-time auditing without exposing the data to the general public.
3. Citadel (Zero-Knowledge Identity)
Citadel is the protocol’s identity layer, utilizing ZK-Proofs of Identity.
* Technical Standard: It uses Range Proofs and Set Membership Proofs.
* Range Proofs: Prove an investor’s income is >\$200,000 (Accredited status) without showing the exact tax return.
* Set Membership: Prove a user is not on the OFAC Sanctions List (a "non-membership proof") without the user having to reveal their full identity to the validator.
Comparison of Disclosure Models
| Technical Element | Traditional Privacy (Monero) | Dusk Network (SEC-Compliant) |
|---|---|---|
| Proof System | Ring Signatures (No selective disclosure) | PLONK SNARKs (Selective disclosure) |
| Auditing | Impossible without full private key | Granular View Keys (Auditor-specific) |
| ID Standard | Fully Anonymous | Citadel ZK-ID (Verified but Private) |
| Regulatory Fit | "Black Box" | "Glass Box" |
4. Poseidon Hash Function
Dusk utilizes the Poseidon Hash Function, which is specifically optimized for ZK-circuits.
* Why it matters: In a US regulatory context, "latency is risk." Poseidon allows for the ultra-fast generation of proofs. This ensures that the "Real-Time Reporting" requirements sometimes suggested by the SEC for digital assets are technically feasible, as transactions don't get bogged down by the heavy computational cost of generating privacy proofs.
Summary: The "Compliance Primitive"
Dusk doesn't just "allow" disclosure; it makes compliance a primitive of the blockchain. By using PLONK and Citadel, the network satisfies the SEC’s "Duty to Monitor" by providing a mathematical guarantee that all participants are verified, while using View Keys to ensure that the actual sensitive data is only visible to the user and the legal authorities.
