Will "De-Fi" platforms be subject to KYC/AML laws in the future? - page 2.

samcrypto

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Quote from: zasad@ on September 21, 2022, 02:02:39 PM

Quote from: libert19 on September 17, 2022, 11:27:58 PM

Dunno exactly, but there should be workarounds around that as you might be able to access these platforms with different frontends. After all, they can only censor frontend and not the smart contract itself.

This is very easy to implement with the help of whitelists for projects and KYC operators. If the project will work in the USA, then it will have to comply with all the norms of the legislation of this country.
But since the KYC procedure will take place remotely, it is possible to use drops.

They have to follow regulations and the reason why many sites is not available in USA is that, there's a strict regulations and DEFI can't afford to take such risk or else they might face problem. DEFI should still be free from any regulations or KYC because that is its purpose but of course due to uncertainty in this market we can't totally say that this will be a KYC free forever, so better to be ready for the worst.

isaac_clarke22

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Quote from: cryptoaddictchie on September 18, 2022, 01:14:03 AM

~

Yeah, same thoughts. We can call it now "CeFi". I had never bought any DeFi coins before when they were mainstream back then, but the scammers were just endless that time and I believe this board was already flooded by people being scammed. With authority or not, encounters with a scammer are endless anyway and let's all consider those phishers.

We don't need centralized platform for scammers to go away. It just happens all the time and there ain't nothing we can do about it regardless.

zasad@

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Quote from: libert19 on September 17, 2022, 11:27:58 PM

Dunno exactly, but there should be workarounds around that as you might be able to access these platforms with different frontends. After all, they can only censor frontend and not the smart contract itself.

This is very easy to implement with the help of whitelists for projects and KYC operators. If the project will work in the USA, then it will have to comply with all the norms of the legislation of this country.
But since the KYC procedure will take place remotely, it is possible to use drops.

merekamo

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In my opinion, "De-Fi" platforms are unlikely to be truly decentralized if they're hosted on centralized servers, and they will thus become subject to the same regulations as their more traditional counterparts.

As a result, there may be no difference between them and traditional financial institutions—the only difference would be their publicizing of this fact, and their choice of location.

The biggest issue here is that it's basically impossible for the government to regulate DeFi platforms without also regulating the underlying assets (cryptocurrencies).

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Quote from: Abiky on September 20, 2022, 07:06:33 PM

Quote from: mindrust on September 18, 2022, 07:50:51 AM

Regulations and decentralization don’t go hand in hand. If a platform is being regulated by an entity, then you can’t call it a decentralized platform. Decentralized means it is unregulated.

Can you regulate bitcoin? You cannot. Every transaction goes through no matter who makes it and everybody can create a transaction. That’s how decentralization works.

You can regulate the exchanges because you know their owners. Since nobody owns bitcoin’s blockchain, it is impossible to regulate bitcoin.

Exactly. But we all know developers use "decentralization" as a "buzz word" to help attract people into their projects. Anything that requires ID verification is not truly decentralized. I'm afraid most so-called "De-Fi" platforms will begin to comply with KYC/AML laws out of fear from the government. It's hard (or almost impossible) to find a project that's truly decentralized and censorship-resistant these days. Any anonymous developer that comes up with a new cryptocurrency or "De-Fi" platform, will be quickly flagged as a "scammer" by the general public. It's sad because this takes crypto/Blockchain tech away from its intended purpose (which is being censorship-resistant by eliminating the middleman).

Yes, regulators are going after Defi if they still continue to be "decentralized", So I also agree that they will be require and mandated by KYC/AML in the future and they can't do anything about it but to follow, otherwise the projects might be sued by SEC.

Quote from: Abiky on September 20, 2022, 07:06:33 PM

Of course, governments can't enforce regulation within decentralized protocols themselves. But they could try to pressure centralized service providers (exchanges, web hosting companies, etc) in order to limit or reduce people's ability to harness the full potential of the Blockchain. It'll be up to developers to make "De-Fi" platforms as censorship-resistant as possible to render governments' efforts useless. Let's hope decentralization wins for the good of crypto/Blockchain tech. Just my thoughts Grin

They have to think another way it they want to stay one step from these regulators. Just like what they did to Monero, they force exchanges to de-list it because it is a privacy and censor resistant coin. But as we can see, Monero still exists up to this day and any other privacy focused coin and continue to evolved to be on top of the game against the regulators.

makishart

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If KYC is required for the decentralized finance (DeFi) projects, it may result in decentralisation is no longer decentralized. I even doubt the KYC for DeFi will be possible as only wallet is required to be DeFi user. Anonymity can never be Separated from the DeFi projects.

It can still be identified by the platform even though you just need to sync your wallet to the platform but the developers can make it happen easily. There's nothing impossible when it comes to the building a platform or even restricting the users.
You can even restrict the users if you are the owner from the defi itself. KYC can be implemented easily to the defi as long as there would be an order from the regulators to did it. This will put defi into the so many disadvantage but im sure that defi developers would like to avoid being jailed rather than not to follow any order from the regulators.

Abiky

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Quote from: mindrust on September 18, 2022, 07:50:51 AM

Regulations and decentralization don’t go hand in hand. If a platform is being regulated by an entity, then you can’t call it a decentralized platform. Decentralized means it is unregulated.

Can you regulate bitcoin? You cannot. Every transaction goes through no matter who makes it and everybody can create a transaction. That’s how decentralization works.

You can regulate the exchanges because you know their owners. Since nobody owns bitcoin’s blockchain, it is impossible to regulate bitcoin.

Exactly. But we all know developers use "decentralization" as a "buzz word" to help attract people into their projects. Anything that requires ID verification is not truly decentralized. I'm afraid most so-called "De-Fi" platforms will begin to comply with KYC/AML laws out of fear from the government. It's hard (or almost impossible) to find a project that's truly decentralized and censorship-resistant these days. Any anonymous developer that comes up with a new cryptocurrency or "De-Fi" platform, will be quickly flagged as a "scammer" by the general public. It's sad because this takes crypto/Blockchain tech away from its intended purpose (which is being censorship-resistant by eliminating the middleman).

Of course, governments can't enforce regulation within decentralized protocols themselves. But they could try to pressure centralized service providers (exchanges, web hosting companies, etc) in order to limit or reduce people's ability to harness the full potential of the Blockchain. It'll be up to developers to make "De-Fi" platforms as censorship-resistant as possible to render governments' efforts useless. Let's hope decentralization wins for the good of crypto/Blockchain tech. Just my thoughts Grin

eXtremal

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DeFi is finance that is managed by a system without being centralized or controlled by anyone. If KYC is used in the DeFi platform then it is not pure DeFi anymore, it seems to be a central crypto bank. I hope this doesn't happen, indeed there are so many scams that exist if done without KYC, but we have to be smart in choosing a platform and without KYC it's also easier because it's simple.

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I am sure there will be a coming conflict with regulators on how to make sure that DeFi platforms and its users can be undergoing the usual KYC process now being implemented in many centralized crypto-based firms. Now, of course, coming from the government their top concern is the security and safety of the people who are on the investing side with DeFi and indeed this concern could not be brushed off easily as we know that people had already lost billions with the bad players of this industry...even popularizing the term "rug pull" and similar concoctions out to scam victims of their money. Personally, am not against KYC but am also concerned with the safety of my data at the same time.

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if KYC is implemented then it should no longer be called DeFi. we are here governed and run by the system, but if there is interference from government regulations then the "decentralization" on the platform will disappear. The upside is that it may not be easy for scammers who usually easily create DeFi but have to go through regulations first.

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Quote from: tbct_mt2 on September 18, 2022, 07:46:33 AM

DeFi projects are not truly decentralized if you count them with strict conditions. If you start a project and you doxed your identity, that project is never a truly decentralized project. ~snip...

I think even the developers are doxxed as long as thr system of a project isnt fully authorized by one entity or governed by different people such as dao then it is decentralized. I dont think defi means the one who created it should be anonymous so government cant know who are they but based on the product they make which proves that they are really no control over decision, tokens and some important aspect of it. When regards that if a project is scam cause they have a fair share of tokens for creating the project, then thats bull shit. I guess Satoshi have some bitcoin shares too also right? (he also created the bitcoin). So there is no difference if some devs have percentage on the total supply, cause if people criticized them then why not also Satoshi, we all knew he has share of bitcoin supply too.

Z390

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Anything is possible, if Ethereum can go against everything it was so against them yes it's possible, only projects with invincible teams can withstand full decentralisation, the reason why BTC was never a victim is because Satoshi knew that staying invisible is the only way to fight the government.

icalical

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I think it finally will, the Regulators will have the same concern to De-Fi just like any other blockchain usage, which is money laundering, and I am sorry to say but if KYC is not required De-Fi will be the easiest way to launder money for bad people. Even though after that there will be some people who sell ID illegally to deceive this KYC requirement.

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Quote from: Abiky on September 17, 2022, 08:26:36 PM

Will this be the future of "decentralized finance"? If not, why? Knowing that most people prefer convenience on top of decentralization, I'm afraid "De-Fi's" future is not as bright as many thought it would be. Your input will be greatly appreciated. Thanks in advance.

If De-FI get subjected to KYC and AML laws then I think that isn't called De-Fi anymore. That is more on Ce-Fi, centralized finance that requires KYC/AML in accordance to government regulation.

De-Fi platforms will never be a subject for KYC/AML because if they do, they will not be called De-Fi anymore. I think it is as simple as that.

I would agree that the DeFi future isn't bright especially when government start hunting this kind of platform.

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Quote from: cryptoaddictchie on September 18, 2022, 01:14:03 AM

Quote from: Abiky on September 17, 2022, 08:26:36 PM

Will this be the future of "decentralized finance"? If not, why? Knowing that most people prefer convenience on top of decentralization, I'm afraid "De-Fi's" future is not as bright as many thought it would be. Your input will be greatly appreciated. Thanks in advance.

If so then its not defi anymore. Defi means decentralized finance and if kyc/amla have been introduced then there is an authority already. Yes we hate the fact that defi has been a ground for scammers and a lot losses money with such breach and exploitation happening on defi. What isnt nice here are those creating platforms to openly scam users. Well the government cant tolerate those scammers and wanted to jail them and hunt them.

As much as we wanted to retain the defi, then there is always scam projects ahead, and if we pursue a centralized regulations to those then we also breaking the definition of defi.

These are my thoughts as well, if we're going to use those platforms and still have to go through KYC policies then what it's the point of DeFi at all? I might as well just use a centralized exchange which has more volume and which has great reputation so the chances I get scammed become very low, so this is something that DeFi platforms must resist and if they don't then I wouldn't be surprised if they lose a great deal of the people that use their services.

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Quote from: cryptoaddictchie on September 18, 2022, 01:14:03 AM

Quote from: Abiky on September 17, 2022, 08:26:36 PM

Will this be the future of "decentralized finance"? If not, why? Knowing that most people prefer convenience on top of decentralization, I'm afraid "De-Fi's" future is not as bright as many thought it would be. Your input will be greatly appreciated. Thanks in advance.

If so then its not defi anymore. Defi means decentralized finance and if kyc/amla have been introduced then there is an authority already. Yes we hate the fact that defi has been a ground for scammers and a lot losses money with such breach and exploitation happening on defi. What isnt nice here are those creating platforms to openly scam users. Well the government cant tolerate those scammers and wanted to jail them and hunt them.

As much as we wanted to retain the defi, then there is always scam projects ahead, and if we pursue a centralized regulations to those then we also breaking the definition of defi.

Same thing I was going to say. I don't know if there are Ce-Fi's too other than De-Fi but if there are then KYC/AML policies can only be applied to them and not to De-Fi's but if let say it will be applied, then that De-Fi service will changed its brand and will join the Ce-Fi category.

There are big scams which had happened on De-Fi but I think some of those scammers have been caught out and the money have been recovered. See? It's still possible for them to be hunted even without those KYC and AML thing. Even if the service is decentralized, the governments are not ignoring them but they still do care for the possible harm that it could dealt in the innocent users.

Xal0lex

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If we want to ensure that there is less scam in the DeFi space and no fear of another rug pull, then DeFi regulation is necessary. DeFi expert, Andre Cronje, wrote about this earlier. A large number of crypto projects are launched in unregulated crypto spaces and investors are completely defenseless against the threat of a scam or liquidity theft. After all, in order to register another token, one can remain anonymous and do anything. Everyone remembers the actions of Sushi's creator, for example. If we are talking about this space becoming a civilized environment for investing and using, it will never happen without regulation. Although it may go against the principles of cryptocurrency, the reality is that where there is no regulation, fraud and manipulation reign.

Imran232

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These things become a little bit confusing and complicated also. First of all, we use Defi for freedom, which is what we actually got in our financial stage. And we don't want to share our personal information with an authority, so I don't think it'll be any good to use decentralized if it breaks its concept. We pay fees on every transaction on defi, such as a swap or exchange, because we don't need to pay huge fees like in decentralised, but if a third party is involved here who is obviously using defi, it will be a confusing decision for us. And if the government makes rules and a company has to follow them, then what can we do? It's obviously complicated. Thanks for the info.

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Technically, how though? I mean d in the defi stands for decentralized, which means that there isn't a central organization that could collect these KYC information. Just because the website itself is on a server doesn't mean that the whole thing is on a server, in fact the website is just an UI for it, normally you could do without that as well, you could literally deal with it purely on blockchain, the website you visit just makes it ten times easier to handle but that is about it.

Moreover, this is technically impossible and the second someone puts in a KYC into a defi, it is no longer a defi and it is a cefi and it will be a whole another point.

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Based on the law they should because it needs to be regulate due to finance involved. User can launder using those DeFi by staking and using the yield profit as clean money. Actually this was already being studied by lawmaker on EU and they are close on implementing new law to apply KYC on DeFi.

KYC DeFi is obviously not DeFi anymore because it will not be decentralized since users identity will be required before they use this kind of financial instrument.

Topic: Will "De-Fi" platforms be subject to KYC/AML laws in the future? - page 2. (Read 408 times)