DeFi execs on the World of Web3 (WOW) Summit in Hong Kong argued that implementing “Know Your Customer” (KYC) measures will deal with the “biggest issue” in decentralized finance (DeFi), which is hackers laundering tens of millions of stolen funds into “clean money.”
Throughout a panel session on the summit on March 29, titled “Blockchain Security to Smart Compliance: AML & KYC Solutions in DeFi,” trade leaders endorsed KYC in DeFi as an answer to deal with Anti-Cash Laundering (AML) points.
Dyma Budorin, CEO of sensible contract auditing agency Hacken, warned of the prevalence of instruments available to hackers to “launder the money” stolen from DeFi platforms, which he described because the “biggest issue” within the trade.
He defined that hackers can simply steal tens of millions of {dollars} and launder the funds into numerous wallets “to make clean money again,” making it troublesome to trace the supply of the funds.
“KYC is about transparency and accountability. I don’t think it’s an issue for a majority of people. I’m sure 99% of people don’t have things to hide. I’m happy to see it as part of our world.”
Nevertheless, Victor Yim, the pinnacle of fintech at Hong Kong’s incubator for entrepreneurship, Cyberport, recommended that KYC alone gained’t resolve all AML issues.
Yim defined that even in conventional finance, the place KYC measures are distinguished, “there is still money laundering happening every day.”
Blockchain Safety to Sensible Compliance : #AML & #KYC for #DeFi Path to compliance is : Now could be one of the best time to show that Defi may be safe and compliant @jessecogo from @Cointelegraph @buda_kyiv @tyyim Alexander Scheer @WOWsummitWorld pic.twitter.com/Lk5mnhMKDS
— Charu (@Charu_Sethi) March 29, 2023
Nevertheless, he believes KYC measures will make a “better tomorrow” for the DeFi trade, including that it’ll require a collective effort, together with “regulators, policy, bureau and other players,” to execute efficiently.
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Yim cited the idea of “anonymous traceable” for example of a stability between anonymity and compliance, with people remaining nameless until referred to as upon by legislation enforcement, including that it’ll “protect the good people while still getting the bad people.”
Alexander Scheer, the founding father of zkMe, emphasised that totally different mechanisms ought to be used for various options, as crypto mixers, for instance, “need to be handled completely differently” to DeFi front-ends, and on- and off-ramps.
Scheer additionally touched on rules, stating that the DeFi trade ought to proactively take the lead and “front run” rules earlier than they’re imposed by regulators.