The Path of Least Friction: Why ZK Credentials Will Pull Credit Onchain
The bottleneck (identified by Hester Peirce)
Onchain credit doesn't have a liquidity problem. It has a permission problem. Every time capital wants to move into a real-world asset, it stops at a checkpoint: prove who you are, prove where you live, prove you're accredited, and then wait.
SEC Commissioner Hester Peirce put her finger on this at SIFMA's Digital Assets Conference on September 23, in remarks titled "Looking to Change Haystacks". Her argument: today's KYC/KYB and AML regime makes every institution collect the same sensitive records, piling up what she called "ever bigger data haystacks." Those troves are expensive to keep, attractive to hackers, and don't make the needles any easier to find.
Her alternative is attribute-based credentials verified with zero-knowledge proofs. Instead of handing over your passport, tax returns and bank statements, you present a proof that answers only the question being asked: Is this person sanctioned? Over 18? An accredited investor? The counterparty learns "yes" and nothing else.
She's right. And the bottleneck she described is about to get much worse before it gets better.
Why the bottleneck gets worse with growth
Today, onboarding is a one-off cost per platform. You fill out a form, upload documents, wait a few days, and you're in. Annoying, but tolerable when you only use one or two venues.
That math breaks as tokenized real-world assets multiply. Look at what's being built: Bulla Network runs stablecoin pools that finance freight invoices and other trade receivables, with short-dated (30 to 60 day) credit that turns over constantly. Some of those pools restrict who can participate. Multiply that by every originator, every credit fund and every tokenized treasury product coming onchain, and an investor faces dozens of separate onboarding flows, each storing its own copy of their identity.
The result is a strange mismatch. Settlement takes seconds. Getting permission to settle takes days. The faster and more composable the rails become, the more glaring the compliance checkpoint looks, because it's the only part of the stack still running at paper speed.
Scenario one: you, your USDC and a Bulla pool
Picture it. You're holding USDC. You've looked at a Bulla pool financing freight invoices, you like the yield and the duration, and you click deposit.
Behind the scenes, the pool's contract asks one question: is this wallet controlled by an accredited investor who has cleared sanctions screening? Your wallet answers with a zero-knowledge proof, generated from a credential a trusted verifier issued to you once. The contract checks the proof. You're accepted. Your USDC goes to work.
The pool never sees your name, income or address. It doesn't store a file it has to protect. You never filled out a form. The whole check happens in the same transaction as the deposit.
Nothing about this requires new cryptography. The pieces exist: Peirce specifically listed accredited-investor status as a fact an attribute-based credential could prove, and SEC staff have already met with teams building proof-based identity tools like ZKPassport. What's missing is regulatory acceptance that a proof can stand in for a stored record.
Scenario two: your agent does it for you
Now take yourself out of the loop. You have an AI agent managing a slice of your capital. You've given it a mandate: target yield, maximum duration, concentration limits, how much default risk you'll tolerate.
The agent scans pools across chains. It compares a freight-invoice pool against a tokenized treasury fund against a working-capital facility. It weighs repayment history, collateral, underwriter track record and liquidity terms. When it finds a better risk-adjusted return, it moves. When a pool's performance slips or a withdrawal queue lengthens, it rebalances.
None of that works if every move requires a human to upload a passport. An agent can't sit through a video KYC call. But an agent can carry your credentials and present proofs on your behalf, scoped to exactly what each pool needs to know. Your identity stays with you. The agent just proves you qualify.
This future isn't far off. Agents that can transact are arriving now. The constraint isn't the AI. It's whether pools are built to accept a proof instead of a person. Pools like Bulla's, which already live onchain with transparent composition and performance data, are natural candidates to become agent-friendly first.
Capital flows to the least friction
Here's the real point. When you remove one bottleneck, you don't just speed things up. You change where capital goes.
Once compliance becomes a proof instead of a process, the cost of entering or exiting an investment drops close to zero. Capital, human or agent-directed, starts searching for the venue where it can invest and divest with the least friction. That search has a predictable winner: assets that are already tokenized, sitting in pools with programmable access rules and transparent data.
That's why originators and credit providers will want to be onchain. A trucking factor or a trade-finance lender that stays offchain is asking investors to fill out forms, wire funds, and wait for quarterly reports. One that tokenizes its claims and finances them through an onchain pool is reachable by any qualified wallet, and any qualified agent, in a single transaction. In a world of agents comparing options continuously, being hard to reach means being skipped.
Tokenized claims and pools aren't just a cheaper rail. They're where frictionless capital will naturally settle.
What still has to be true
It's worth being clear-eyed. Peirce's remarks were her own views, not SEC policy, and they didn't change any current rule. Broker-dealers still have to run customer identification programs and keep records. A few things need to happen before this scenario is routine:
- Regulators accept proofs as compliance. Existing rules assume a firm stores the underlying data. Someone has to bless a proof as sufficient, at least for specific checks like accreditation and sanctions screening.
- Trusted issuers exist. A proof is only as good as the credential behind it. Banks, broker-dealers or licensed verifiers need to issue credentials that pools are willing to rely on, something Peirce also pointed toward when she suggested making it easier to rely on third-party verification.
- Credentials can be revoked. Accreditation lapses. Sanctions lists change. Proofs need a way to reflect that without a fresh document upload.
- Agent responsibility is settled. When an agent invests on your behalf, who's accountable for suitability and for following the mandate? That question needs an answer before agents manage meaningful capital.
- Economic risk doesn't disappear. A smooth front door doesn't change what's behind it. Investors and their agents still have to judge borrower repayment, collections, liquidity and underwriting quality.
The search for the path of least resistance
Every financial system routes around its slowest part. For onchain credit, that part is identity and compliance. Peirce has sketched how to fix it without giving up the goals of KYC and AML: prove the fact, skip the haystack.
When that fix lands, the question for originators and credit providers won't be whether to come onchain. It will be how quickly they can get there before investors, and their agents, have already moved their capital somewhere easier to reach.
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