DeFi Execs See KYC as Best Way to Curb Money Laundering

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  • DeFi executives meeting in Hong Kong consider embracing KYC measures as  the best defense against money laundering
  • The execs noted that hackers have easy access to avenues that facilitate the vice
  • They believe 99% of people are ready to share personally-identify information since they have nothing to hide

Decentralized finance (DeFi) executives attending the World of Web 3.0 (WOW) convention in Hong Kong have noted that embracing KYC methods is the best line of defense against money laundering in the cryptocurrency world. They said that crypto hackers have easy access to avenues that facilitate the movement of illicit funds, with crypto mixer Tornado cash being among the most used platforms to move stolen funds by masking the receiving wallet. According to the executives, 99% of people in the DeFi world are ready to provide personally-identifying details since they have nothing to hide.

DeFi KYC Rules Not Enough

However, executives like Cyberport’s fintech lead Victor Yim noted that KYC measures need to be combined with other tactics to completely stop hackers from “cleaning” dirty money. According to Yim, the traditional finance space is still experiencing money laundering cases despite employing stringent KYC rules.

Although Yim sees a better future for the space when applying KYC rules, he added that its effectiveness would require joint efforts from financial watchdogs, policymakers, and the DeFi world. 

According to Yim, the industry can comply with AML rules and maintain anonymity through an “anonymous traceable” approach. The approach coincides with the one used by Privacy Pools, a regulatory-compliant sequel to Tornado Cash.

No Crypto-specific Regulations

zkMe founder Alexander Scheer, another speaker at the WOW summit, noted that different crypto aspects should be regulated differently and stop using a one-size-fits-them-all approach. 

Scheer’s comments seem to touch on SEC chair Gary Gensler’s recent comment that the U.S. securities watchdog isn’t going to formulate crypto-specific regulations. Others like Federal Reserve chair Jerome Powel and the IMF have called for urgent crypto regulations with the IMF calling virtual assets a “challenge.”

With growing crypto regulation calls, complete anonymity in the decentralized world may soon be forgotten.