Compliance & Regulatory

LucenDEX operates as neutral infrastructure—not a broker, custodian, or money transmitter. This document explains our KYC-free model and regulatory positioning.

Infrastructure Provider Model

LucenDEX provides infrastructure services, similar to AWS, Cloudflare, or Infura. We don't:

Hold or custody user funds
Facilitate trades on behalf of users
Have discretionary control over execution
Maintain user accounts or balances

Partners integrate our APIs to access XRPL liquidity. They manage user relationships, compliance policies, and regulatory obligations for their jurisdiction.

Why No KYC Required

1. Non-Custodial Architecture

We never hold user funds. All transactions are signed client-side. We provide routing and optional relay services—your keys remain with you.

2. Data Minimization

We only store public blockchain data necessary for DEX routing:

AMM pool reserves (from AMMCreate, AMMDeposit, AMMWithdraw)
Active orderbook offers (from OfferCreate, OfferCancel)
Ledger checkpoints for continuity

Not stored: Payments, account balances, user identities, IP addresses, or any PII.

3. XRPL Addresses ≠ User Identities

XRPL addresses are pseudonymous. We index public DEX transactions without linking them to real-world identities. This is analogous to running a blockchain explorer—public data aggregation, not financial services.

Precedent: Block explorers (Etherscan, XRPScan) index blockchain data without KYC. LucenDEX indexes a subset of XRPL data (DEX only) for routing purposes.

AML Considerations

While LucenDEX itself is KYC-free, partners may implement:

Geofencing: Block sanctioned jurisdictions at API edge
Sanctions screening: Check XRPL addresses against OFAC lists
Transaction monitoring: Partners can log and analyze usage patterns

We provide the infrastructure; partners implement compliance policies appropriate for their jurisdiction and business model.

Deterministic Execution (No Discretion)

QuoteHash binding ensures we have zero discretionary control over execution:

QuoteHash = blake2b-256(
  sorted_params +
  route +
  fees +
  TTL
)

The QuoteHash is embedded in the XRPL transaction memo. Execution must match the quoted terms exactly or fail. No slippage manipulation, no execution discretion.

Regulatory Implication: Deterministic execution removes discretionary control—a key factor in broker/dealer classification. We compute routes algorithmically; users sign and submit transactions themselves.

Data Retention & Privacy

What We Store

AMM Pools: Current reserves only (no history)
Orderbook: Active offers only (cancelled offers marked, not deleted)
Checkpoints: Ledger index, hash, timestamp (audit trail)
Usage Metrics: Partner API usage (keyed by partner_id, not user identifiers)

What We Don't Store

User accounts or profiles
Payment transactions
Account balances
IP addresses or session data
Any PII (names, emails, KYC documents)

Partner Compliance Obligations

Partners integrating LucenDEX APIs should consider:

If You're a Wallet

You remain non-custodial (transactions signed client-side)
Consider geofencing for sanctioned jurisdictions
Determine if your model requires KYC based on local regulations

If You're a Fintech or Institution

Apply your existing KYC/AML policies to users
Use our infrastructure for execution rails
Log and monitor usage for compliance reporting

If You're a Custodian

You maintain custody controls and compliance
Use LucenDEX for deterministic best execution
Audit QuoteHash binding for verifiable execution

Regulatory Positioning

Question	LucenDEX Answer
Do you custody funds?	No - Non-custodial architecture
Do you facilitate trades?	No - Provide infrastructure only
Do you have execution discretion?	No - QuoteHash binding, deterministic
Do you store PII?	No - DEX data only, data minimization
Do you link addresses to identities?	No - Pseudonymous XRPL addresses
Are you a broker/dealer?	No - Infrastructure provider model

Summary: LucenDEX operates as neutral infrastructure for XRPL DEX access. We provide deterministic routing and execution rails without custody, discretion, or user account management.

Transparency & Auditability

Infrastructure transparency is core to our compliance strategy:

Validator: Publicly verifiable at lucendex.com/.well-known/xrp-ledger.toml
QuoteHash: Cryptographic binding enables third-party verification
Open Architecture: Partners can audit our deterministic execution model
Blockchain Transparency: All executions visible on XRPL ledger

Contact for Compliance Questions

If you have questions about our compliance model or need regulatory documentation for your jurisdiction, contact us.