MPC Solutions vs Multisig Solutions for Sanctions Screening

MPC (Multi-Party Computation) Solutions excel at integrating real-time, programmatic compliance checks directly into the transaction signing flow. Because key shards are held by a single entity or service, they can leverage centralized risk engines like Chainalysis or Elliptic to screen counterparty addresses against OFAC SDN lists before signature generation. For example, Fireblocks and Copper enforce policy-based transaction rules that can block non-compliant transfers in milliseconds, a critical feature for institutional clients managing high-volume trading desks.

Multisig Solutions take a different, more decentralized approach by distributing signing authority across multiple independent parties (e.g., 2-of-3). This architecture inherently provides a human governance layer for compliance, as multiple approvals are required. However, this results in a trade-off: screening must be performed off-chain by each signer or a dedicated compliance service like TRM Labs, which can introduce latency and coordination overhead. Protocols like Gnosis Safe rely on this model, where compliance is enforced through social consensus and modular safe apps rather than cryptographic enforcement.

The key trade-off: If your priority is automated, low-latency enforcement and centralized policy management for high-frequency operations, choose an MPC solution. If you prioritize decentralized governance, explicit multi-party oversight, and are willing to accept manual review steps for compliance, a Multisig framework is the stronger choice.

MPC (Multi-Party Computation) Solutions excel at privacy-preserving compliance by performing checks on encrypted data, never exposing raw addresses to any single party. This architecture is ideal for institutions handling sensitive client data, as it minimizes data breach risks and aligns with privacy-by-design principles. For example, platforms like Fireblocks and Qredo leverage MPC to screen against OFAC lists without revealing the underlying wallet addresses, a critical feature for hedge funds and private banks.

Multisig Solutions take a different approach by enforcing compliance at the transaction approval layer. Smart contract-based multisigs (e.g., Safe{Wallet}, Gnosis Safe) can integrate screening oracles like Chainalysis Oracle or TRM Labs to require a clean sanctions check before any signature is valid. This results in a transparent, on-chain audit trail but introduces a trade-off: the wallet addresses being screened are publicly visible on the blockchain, which may conflict with privacy requirements.

The key trade-off is between privacy and transparency. MPC's cryptographic approach offers superior privacy and operational speed, with screening often completed in sub-second latency, but can involve higher implementation complexity and reliance on specialized vendors. Traditional multisig is more transparent, easily auditable, and leverages battle-tested smart contract standards, but exposes wallet graphs. Consider MPC if you need to protect client data sovereignty and require high-frequency, private screening. Choose Multisig when your priority is maximum transparency, you have existing smart contract expertise, and your use case benefits from a publicly verifiable compliance log.