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

[OgNasty]

With the US government declaring that they have oversight over Ethereum, it definitely sets up for some crazy battles in the future.  I can't imagine how all this defi stuff is going to be regulated.  I didn't think it would make it this far to be honest.  The next couple of years are going to be full of courts making decisions about people's finances on the other side of the globe.  I'm sure a lot of effort will be done to track everyone though one way or another.

[Ozero]

KYC/AML shouldn't be subject to De-Fi platforms.

Owners and users are responsible for taking care of their assets, most especially on investing/buying other coins and tokens, or entrusting their funds easily on different platforms.

States are able to regulate and will regulate all activities that can bring profit to people. If the state cannot technically regulate the product itself, it will regulate its circulation in society. So it was and so it will always be, as long as states exist as a form of social order. At some lower levels, complete decentralization is still possible. But if we bring certain products or relations to the level of society, everything is subject to regulation. The state, in order for it to be able to exist, has the right to protect its interests. And it will always exercise this right.

[Abiky]

With the US government declaring that they have oversight over Ethereum, it definitely sets up for some crazy battles in the future.  I can't imagine how all this defi stuff is going to be regulated.  I didn't think it would make it this far to be honest.  The next couple of years are going to be full of courts making decisions about people's finances on the other side of the globe.  I'm sure a lot of effort will be done to track everyone though one way or another.

FED chairman Jerome Powell already said "De-Fi should be regulated", so expect further scrutiny into crypto/Blockchain tech from the US government. This shouldn't be surprising, especially when governments want to exercise control over people's lives. Since "De-Fi" is something out of their reach, expect attacks against the revolution will to continue. I'm afraid the US government will be successful in their task of "regulating" "De-Fi" simply because most blockchain platforms are centralized. Not only that, but most dApps also have their frontend interfaces hosted on centralized servers. We'll never achieve true censorship-resistance this way.

How can Blockchain fulfil its purpose when most projects don't care about decentralization? As long as there's money involved, don't expect things to get better soon. Just my thoughts

[merekamo]

They (US government) are trying to force these exchanges to break down their walls and comply with KYC/AML laws by requiring users to register with personal information to trade on the platform.

The goal is for the government to see all of these people's trades and balance sheets, as well as get information about what these people are doing with their money.

For example, when you deposit money in a bank account, you're giving up control of that money to the bank—you no longer own it.

With DeFi, you retain custody of your assets, which means they are yours to use as you see fit. So, I think DeFi technology is the future since it brings solutions to traditional financial problems.

[dansus021]

hahaha interesting in my opinion is yes after you have said that tornado.cash (that "decentralized" has been sanctioned) it possible that other DeFi will be next but since most of DeFi team is anon and the project is open source any government cant stop that easy, maybe it become like Centralized Exchange

there is some kyc in some country and the other hand is not

[South Park]

KYC/AML shouldn't be subject to De-Fi platforms.

Owners and users are responsible for taking care of their assets, most especially on investing/buying other coins and tokens, or entrusting their funds easily on different platforms.

States are able to regulate and will regulate all activities that can bring profit to people. If the state cannot technically regulate the product itself, it will regulate its circulation in society. So it was and so it will always be, as long as states exist as a form of social order. At some lower levels, complete decentralization is still possible. But if we bring certain products or relations to the level of society, everything is subject to regulation. The state, in order for it to be able to exist, has the right to protect its interests. And it will always exercise this right.

But their desire to supervise everything to such a great extent is causing the economy to slow down, for example many banks do not accept US citizens as their clients as the regulations the US government forced them to follow are so complex and convoluted that foreign banks prefer to lose those clients than to deal with the US government, so while I can see why governments want to have some sort of regulatory powers in this market they are so strict that many companies will simply stop complying, reaching the opposite effect of what they were looking for.

[Abiky]

They (US government) are trying to force these exchanges to break down their walls and comply with KYC/AML laws by requiring users to register with personal information to trade on the platform.

The goal is for the government to see all of these people's trades and balance sheets, as well as get information about what these people are doing with their money.

For example, when you deposit money in a bank account, you're giving up control of that money to the bank—you no longer own it.

With DeFi, you retain custody of your assets, which means they are yours to use as you see fit. So, I think DeFi technology is the future since it brings solutions to traditional financial problems.

Governments know they can't control crypto/Blockchain tech, so they're resorting to "regulating" crypto through centralized exchanges as they're usually on-off ramps between Fiat and the decentralized world of Blockchain. They're asking exchanges to give out customers' personally-identifiable information for their own benefit. That would give them some level of control over the industry as most coins circulate through centralized exchanges. Don't be surprised if they're able to successfully force KYC/AML on "De-Fi" platforms, especially when most of them are centralized. Anything that's hosted on a centralized server or has a middleman behind it, can be easily taken down by the government. Developers don't care about this since they're only after the money.

Expect to see further scrutiny on this industry until crypto/Blockchain tech becomes no different than traditional banks. It seems to me that Bitcoin will remain the only truly decentralized blockchain in existence while the rest will go all the way down the drain. Just my thoughts

[VictorIBT]

If you're looking for fully private L1 defi I'd recommend  https://twitter.com/beamprivacy, as it won't be subject to KYC/AML, yet it's auditable and you can share your own information. You control absolutely every piece of info you want to share.

[Kadal Ijo]

I think so, it's better to apply KYC. Of course I hope the application of KYC in the Defi project so that it makes us more optimistic with the developer, Defi who already has a large market will be prone to be used for scams if it does not apply KYC.

[RussianEnglishTranslation]

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. You can't censor the contracts themselves if they are hosted on decentralized versions of github, which would be a perfect DApp on the internet computer. In fact, I think they might already have that one.

[Jaered]

I think it would be. I hope with all my might it would be. Decentralized finance is a beautiful niche in crypto. Unfortunately, it has been overtaken and swamped by all manner of scammers and malicious actors trying to game the system. It does not show good of crypto. We need sanitization of the system

[South Park]

I think so, it's better to apply KYC. Of course I hope the application of KYC in the Defi project so that it makes us more optimistic with the developer, Defi who already has a large market will be prone to be used for scams if it does not apply KYC.

But why bother using those services which are supposedly decentralized only to eventually be forced to accept to identify yourself when you can use centralized exchanges which offer a better service, have better reputation, have been around for longer and which have a higher volume? The main reason to use a decentralized exchange should be because you care about your privacy, and if it is not going to be respected anyway then there is not a single reason to use them at all.

[Abiky]

But why bother using those services which are supposedly decentralized only to eventually be forced to accept to identify yourself when you can use centralized exchanges which offer a better service, have better reputation, have been around for longer and which have a higher volume? The main reason to use a decentralized exchange should be because you care about your privacy, and if it is not going to be respected anyway then there is not a single reason to use them at all.

Exactly. There will be no point in using "De-Fi" if platforms are going to require you to verify your ID. The whole point of decentralization is to remove the middleman from the system. Don't tell me that a system requiring ID verification won't have a middleman behind it. There has to be someone behind it to help provide governments with the information they need. Thus, "De-Fi" platforms complying with KYC/AML laws would effectively turn centralized by design.

That's what you get when crypto becomes extremely popular in the mainstream world. Regulators would want a piece of the pie by limiting crypto's potential as much as possible. It would be up to us whenever we will allow the government to interfere in everything related to crypto or not. If we oppose such actions, you can rest assured the government will leave crypto alone. But most people don't care, so governments will continue to do what they're doing until they destroy crypto/Blockchain tech for good. No one knows what will be the governments' next move, so we can only hope for the best. Just my thoughts