Every cross-border payment, trade finance deal, or securities settlement requires a complex web of identity verification. Each bank, custodian, and intermediary maintains its own siloed Know Your Customer (KYC) and Anti-Money Laundering (AML) databases. This fragmentation forces repetitive, manual checks for every new transaction, creating a process that is slow, costly, and prone to human error. The result? Settlement cycles are extended, operational costs balloon, and the risk of fraud or compliance failures increases with every manual handoff.
LABS
Use Cases
Decentralized Identifiers for Settlement Parties
Leverage blockchain-based digital identities to automate KYC/AML screening, eliminate redundant checks, and reduce errors in the cross-border settlement chain, cutting operational costs by up to 70%.
Chainscore © 2026
problem-statement
DECENTRALIZED IDENTIFIER FOR SETTLEMENT PARTIES
The Challenge: A Fragmented, Costly, and Error-Prone Identity Jungle
In today's global financial ecosystem, verifying the identity of every counterparty in a transaction is a monumental, manual, and expensive task that introduces significant risk and delay.
The core issue is the lack of a universal, trusted source of truth. A corporate entity opening an account with multiple banks must undergo the same arduous documentation process each time. This isn't just an inconvenience; it's a direct hit to the bottom line. Studies estimate that financial institutions spend billions annually on KYC and client onboarding compliance. Furthermore, this manual 'identity jungle' creates audit nightmares, as proving compliance requires stitching together evidence from dozens of disparate systems.
This is where Decentralized Identifiers (DIDs) and verifiable credentials present a paradigm shift. Imagine if a corporate entity could create a single, cryptographically secure digital identity—a DID—that they own and control. They could then obtain verifiable credentials from a trusted auditor or regulator, which are signed and tamper-proof. When transacting with a new bank, they simply present these credentials for instant, cryptographic verification. The bank no longer needs to run the entire KYC process from scratch; they can trust the credential's cryptographic proof.
The business outcomes are transformative. Onboarding times can be reduced from weeks to minutes, slashing operational costs. Settlement fails due to identity mismatches plummet, improving straight-through processing rates. The audit trail becomes immutable and transparent, dramatically simplifying regulatory reporting. This isn't just a tech upgrade; it's a fundamental re-architecture of trust that turns a cost center into a competitive advantage, enabling faster, cheaper, and more secure global transactions.
key-benefits
DECENTRALIZED IDENTIFIERS (DIDs)
Key Benefits: From Cost Center to Strategic Advantage
Move beyond manual verification and siloed KYC. Decentralized Identifiers (DIDs) for settlement parties create a reusable, self-sovereign identity layer, turning compliance from a cost center into a source of efficiency and new revenue.
01
Slash KYC/AML Costs & Onboarding Time
The Pain Point: Repeating full KYC checks for every new counterparty relationship is expensive and slow, costing financial institutions millions annually.
The Blockchain Fix: A DID acts as a portable, verifiable credential. Once a party is verified by a trusted entity, they can reuse that credential across the ecosystem. This enables:
- 70-90% reduction in per-customer onboarding costs.
- Onboarding time cut from weeks to minutes.
- Example: A trade finance consortium uses DIDs to instantly verify shipping companies and exporters, eliminating redundant paperwork.
70-90%
Lower Onboarding Cost
Weeks → Minutes
Faster Onboarding
02
Eliminate Reconciliation & Disputes
The Pain Point: Mismatched legal entity identifiers (LEIs) and manual data entry cause costly settlement fails and reconciliation headaches.
The Blockchain Fix: A globally unique, cryptographically verifiable DID ensures all parties in a transaction are unambiguously identified on a shared ledger. This creates an immutable audit trail where:
- "Golden record" of identity is synchronized across all systems.
- Settlement fails due to identity errors are virtually eliminated.
- Real-World Impact: In securities lending, DIDs ensure borrower, lender, and custodian are instantly and correctly identified, automating collateral calls and reducing operational risk.
03
Unlock Automated, Compliant Workflows
The Pain Point: Manual checks for sanctions lists and regulatory compliance create bottlenecks and human error in payment and trade flows.
The Blockchain Fix: DIDs can be linked to verifiable credentials that attest to regulatory status. Smart contracts can automatically check these credentials before executing transactions.
- Enable "straight-through processing" for cross-border payments with embedded compliance.
- Automatically restrict transactions with parties holding revoked credentials.
- Example: An insurance syndicate uses DIDs with accredited-investor credentials to automatically enforce regulatory limits on participation.
04
Create New Revenue with Trusted Data
The Pain Point: Valuable entity data is locked in internal silos, creating no value beyond basic compliance.
The Blockchain Fix: With user consent, DIDs enable secure, granular data sharing. Institutions can offer verified identity attributes as a service to partners.
- Monetize KYC investments by issuing verifiable credentials to customers for use elsewhere.
- Build new B2B services like trusted counterparty discovery networks.
- Strategic Advantage: Become the anchor of trust in your industry's digital ecosystem, moving from a cost center to a profit center for trust.
SETTLEMENT EFFICIENCY
ROI Breakdown: Quantifying the Value of DIDs
Comparing the operational and financial impact of Decentralized Identifiers against traditional identity management for settlement parties.
| Key Metric / Cost Center | Legacy Centralized Systems | Hybrid Federated Model | DID-Based System |
|---|---|---|---|
Average Identity Verification Cost per Party | $25-100 | $10-30 | < $5 |
Time to Onboard New Counterparty | 5-10 business days | 2-5 business days | < 1 business day |
Annual Compliance & Audit Labor Cost | $200k+ | $75k-150k | $25k-50k |
Fraud & Reconciliation Losses | 0.5-2.0% of volume | 0.2-0.8% of volume | < 0.1% of volume |
System Integration & Maintenance | High (Proprietary APIs) | Medium (Standard APIs) | Low (Open Standards) |
Identity Data Portability | |||
Automated KYC/AML Checks | |||
Real-Time Credential Revocation |
real-world-examples
DECENTRALIZED IDENTIFIERS (DIDs)
Real-World Examples & Industry Momentum
Decentralized Identifiers (DIDs) are transforming how enterprises manage counterparty identity and trust in financial settlements, moving from fragile, manual verification to automated, cryptographically secure systems.
03
Streamlining Trade Finance
Solve the double-spending problem of paper documents like Bills of Lading. By attaching a DID to each digital asset and the parties involved (exporter, importer, bank, shipper), you create a tamper-proof chain of custody. This accelerates letter of credit issuance and reduces fraud.
- Real Example: Marco Polo Network and we.trade leverage decentralized identity to authenticate all parties in a trade finance transaction, enabling automated, conditional payments.
- ROI Driver: Faster settlement cycles (from 10+ days to <24 hours) and reduced capital tied up in transit.
04
Secure DeFi & Institutional Gateway
Provide institutions with a verified on-chain identity to access DeFi protocols while meeting regulatory requirements. DIDs allow for whitelisting, permissioned access, and attestations of institutional status, bridging TradFi and DeFi securely.
- Real Example: Projects like Provenance Blockchain use identity frameworks to enable regulated financial institutions to issue and trade digital assets with full KYC transparency.
- ROI Driver: Unlocks new revenue streams in digital asset markets while maintaining strict compliance controls.
06
Audit & Regulatory Reporting
Transform regulatory reporting from a quarterly fire drill into a continuous, verifiable process. All transactions and party interactions anchored to DIDs are inherently auditable. Regulators can be granted permissioned access to verify activity without compromising other sensitive data.
- Real Example: The UK FCA's Digital Sandbox has explored DIDs for improving the efficiency and transparency of regulatory reporting.
- ROI Driver: Cuts audit preparation time and costs significantly while providing superior transparency to reduce regulatory risk.
DECENTRALIZED IDENTIFIERS (DIDs)
Compliance Considerations & Adoption Path
Adopting DIDs for settlement parties requires navigating a complex landscape of regulation and integration. This section addresses the critical business and compliance questions CIOs and CFOs face, providing a clear path from pilot to production with measurable ROI.
A Decentralized Identifier (DID) is a new type of globally unique identifier that an individual or legal entity (like a bank or corporate) creates, owns, and controls, without reliance on a central registry. In financial settlements, a DID acts as a self-sovereign digital identity for each party (payer, payee, correspondent banks).
How it works:
- Each settlement participant generates their own DID and associated cryptographic keys.
- The DID is anchored to a public blockchain (e.g., Hedera, Ethereum) or a distributed ledger, creating a verifiable, tamper-proof record of its existence.
- Verifiable Credentials (like KYC attestations or bank licenses) issued by trusted entities are cryptographically linked to this DID.
- During a transaction, parties can instantly and programmatically verify each other's identity and credentials without querying multiple, siloed databases, reducing counterparty risk and manual checks.
ENQUIRY
Get In Touch
today.
Our experts will offer a free quote and a 30min call to discuss your project.
NDA Protected
Confidentiality24h Response
Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall