Enabling Secure and Scalable GDPR-Compliant Blockchain-Based e-KYC With Efficient Redaction

As electronic Know Your Customer (e-KYC) systems become integral to modern financial services, ensuring compliance with stringent privacy regulations—particularly the General Data Protection Regulation (GDPR)—has become paramount. However, most existing blockchain-based e-KYC solutions are limited by two critical shortcomings. First, they lack native support for data redaction, conflicting with GDPR’s “right to be forgotten,” since data once recorded on-chain becomes immutable and globally persistent. Second, they fail to scale under high-volume cross-institutional transactions, where centralized authentication models and monolithic blockchain structures lead to computational bottlenecks, increased latency, and communication overhead across financial institutions FIs. To address these gaps, we propose a novel blockchain-based e-KYC framework that is GDPR-compliant, privacy-preserving, and highly scalable. Our solution introduces three key innovations: 1) ZK-Rollup-based authentication integrated with sharded blockchain architecture, enabling off-chain proof batching and distributed verification across shards for high-throughput, low-latency validation; 2) adaptive proxy re-encryption to support secure and dynamic customer data portability between host and requesting FIs; and 3) an optimized redactable blockchain protocol using off-chain Chameleon Hash collision generation and threshold cryptography-based key rotation to enable efficient, secure, and verifiable data updates in compliance with GDPR. Our experimental results show substantial performance gains in authentication verification, redaction throughput and cross-FI transaction efficiency, validating the practical applicability of our scheme in real-world, regulation-sensitive e-KYC deployments.