According to DeFi executives speaking at the World of Web3 Conference in Hong Kong, the greatest concern in decentralised finance (DeFi) is cybercriminals turning millions of dollars in illicit money into clean money. Leading companies emphasised the effectiveness of KYC in DeFi as a means of tackling Anti-Money Laundering vulnerabilities throughout a panel discussion on March 29 called "Blockchain Security to Smart Compliance: AML & KYC Solutions in DeFi."
Scammers have access to a number of techniques that make it simple for them to launder money taken through DeFi networks, according to Dyma Budorin, CEO of the smart contract auditing company Hacken. He further added this is the greatest difficulty facing the sector, making it challenging to trace the source of funds.
Yet, he was upbeat about KYC regulations, saying: that KYC is about clarity and integrity and I don't believe the majority of people find it to be a problem. However, 99% of people have nothing to conceal. The fact that it exists in our world makes me joyful.
According to Victor Yim, Head of Fintech at Hong Kong's Cyberport business incubator:
"Adding KYC measures by itself won't be sufficient to address the AML problems in DeFi. Although KYC procedures are in place in conventional banking, Yim noted that money laundering still happens often."
Blockchain Security to Smart Compliance : #AML & #KYC for #DeFi Path to compliance is : Now is the best time to prove that Defi can be secure and compliant @jessecogo from @Cointelegraph @buda_kyiv @tyyim Alexander Scheer @WOWsummitWorld pic.twitter.com/Lk5mnhMKDS
— Charu (@Charu_Sethi) March 29, 2023
Yim further states that these actions will help DeFi have a prosperous future, and continuing effort from lawmakers, bureaus, and other partners is necessary to ensure this happens. He also suggested the use of anonymous traceable technology, which keeps people nameless until law enforcement has to identify them. The purpose of this method is to keep good people safe while still catching bad players.
The creator of zkMe, Alexander Scheer, emphasised the significance of using multiple techniques for various solutions. For instance, crypto mixers should be tackled more independently than DeFi front-ends and on- and off-ramps. Additionally, he encouraged the DeFi sector to "front run" laws before they are put in place by authorities.