Moneyness: DeFi needs more secrecy, but not too much secrecy, and the right sort of secrecy

Another good post from JP Koning’s “Moneyness” blog on the need for DeFi to strike a balance partly between its native potential for transparency, the desire of customers to keep some secrets and the need to meet the same kinds of Know Your Customer – Anti Money Laundering laws that the conventional banking system is required to comply with.

Here is a short extract …

To make their tools palatable for Main Street, DeFi tool makers will have to unwind some of the native anonymity (potentially) afforded by blockchains by collecting and verifying identifying information from users. This way the tools can screen out criminals, assuring legitimate businesses that their clean funds aren’t being tainted by dirty money.

The implication is that DeFi tools will have to become privacy managers, just like old-school banks are. Users will have to trust the tools to be discreet with their personal information, only breaking their privacy when certain conditions are required, such as law enforcement requests.

… and a link to source post.

Tony – From the Outside

Author: From the Outside

After working in the Australian banking system for close to four decades, I am taking some time out to write and reflect on what I have learned. My primary area of expertise is bank capital management but this blog aims to offer a bank insider's outside perspective on banking, capital, economics, finance and risk. View all posts by From the Outside