Emerging global AML/KYC framework and DeFi (and Maker)

Who would you recommend as a thought leader?

Interesting takes from, Hester PeirceCommissioner, Securities and Exchange Commission

“DEX AMMs that are trading securities among other things, need to think about the security implications there.”

“Strategies that Mimic securities, or are doing things related to asset management fall under the purview of the SEC”

“to the CeFi world, don’t try to embolden regulation to stop DeFi from developing but look for ways to interact with it to the extend that it is valuable for you and then you can be part of the growth that is going on in that part of the economy”

Tough love from Hester. It’s like she loves you one day and then the next… :laughing:

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I think you are quoting from the BIS meeting CeFi to DeFi: can global finance be de/re-constructed? that had no speaker from DeFi at all.

When someone from MakerDAO will be at those meetings, that will be the new dawn.

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Indeed. But, it had Joe Lubin, he’s 1000% ETH/DeFi. I mean he might have acted as he is not all about DeFi-- but can you blame him… I thought it was a positive talk for DeFi

As I understand, facilitating some DeFi project (i.e. running a web site) without KYC could be illegal. Voting without KYC could be illegal. Having an admin key without KYC could be illegal. Do we implement KYC or try to find a loophole (assuming a rebellion does not help)?


Could you provide more primary sources for your strong statements? Saying something is “illegal” or “could be illegal” without some citation to a specific regulatory release or case precedent comes off as bombastic with little substance.

If having an admin key without KYC were illegal, shouldn’t a number of our favorite DeFi friends be sitting in a jail cell now? Last time I checked that wasn’t the case.

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I was referring to the FATF guidance: https://www.fatf-gafi.org/media/fatf/documents/recommendations/March%202021%20-%20VA%20Guidance%20update%20-%20Sixth%20draft%20-%20Public%20consultation.pdf

Article: A quick analysis of FATF’s 2021 draft cryptocurrency guidance - Coin Center

Can anyone think of the way how to make DeFi more resilient to such attempts?

Well, asking this type of questions was exactly my point and that’s why at the very beginning I wrote this:

Let’s remember that end of day it’s mostly about dealing with complex regulatory regimes, not just slogans (like e.g. “DeFi without KYC is illegal”). What’s more, the primary task should be to make Maker resilient, not necessarily to solve all problems of the industry. Maker community will just need a strategy and resources (especially a highly qualified and dedicated workforce) for doing that.


Good morning,
First post here so please be kind. Long term crypto enthusiast and lobbyist to Government. My latest submission on behalf of the EU DeFi Working Group.

Compliance and regulatory issues are increasingly important, engagement here is key. There is still a significant amount of fear about what stablecoins objective is and the wider DeFi space in general.

I believe that preventing ML and TF is critical, however ironically the way to reduce trafficking is reduce the desperate need these people face at a fundamental level. Being able to build some wealth is a critical first step.

We must shift the thought processes from the 1970’s passport and address type thinking to a new digital path and an acceptance that on open systems the transparency enabled can derisk to a point.

Happy to engage in this space, it’s critical to unblocking usage through the global population.


Good to see you here, Ben!

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@jacek Thanks for providing guidance in terms of the international guidelines for VASPs emitted by the FAFT. Closer to home (New Zealand) is taking a proactive role is helping cascading down some of these guidelines to local operators and government bodies. We’ve been witnessing a number of both private actors (e.g. law firms, associations) and government agencies and a cooperation between the Reserve Bank and FMA setting up dedicated bodies to assist fintechs navigate the FAFT guidelines. It’s quite a positive move and the close link of interactions in a small country is actually going to help propel a bigger number of startups from here. It’s actually already happening.

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I think the issue here is to ensure the guidelines are sensible in the first place. Right now, the guidelines are being drawn up by trying to replicate the old rules. We need to focus on what the outcomes we want are and allow the market to solve them.


Here’s a nice breakdown of the proposed recommendations by FAFT in an interview with Dave Jevans of Cipher Trace:

2:45 What does the FAFT guidance say about DeFi?
6:00 Is the Guidance forcing DeFi Platforms to become centralized?
7:15 Blockchain based identities?
9:45 FAFT Public Hearings: April 8th and 15th – proposed recommendation probably announced around June 15, 2021.
11:00 Proposed Guidance for NFTs and what NFT platforms should be thinking about
15:40 Who to talk to if YOU want to help change the FAFT GUIDANCE—I should say How to…
21:29 Take a look and focus on Section 75 & 79 of the FAFT posted Guidance

By the way I think the FAFT folks are based in Paris—we should send @SebVentures out there! :slight_smile:


Good news: Fidelity, Coinbase, Square form crypto council to lobby policy makers

We need more of that :point_up_2:t4:

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SBF Alameda donated to the Biden Administration. Hopefully FTX helps lobbying Congress as well to move the needle on responsible regulation.

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This is a decent episode – though my issue would be with Dave’s overarching statements with regard to DeFi. Laura could have chosen a better presenter but Ciphertrace is a sponsor so wants the airtime to hawk their name and (crappy) solutions. Keep in mind with people like Dave, they have a direct financial incentive in selling their on-chain analytics and kyc programs to affected protocols.


Update on FATF: the revised guidance on virtual assets is now expected in October (source).


Update: new FATF guidance was published today. I’ll start a new thread in forum where I will provide some initial analysis.


Here’s the link for anyone who wants to read through while waiting on a fresh thread.

Just started the new thread here: FATF Guidance (Crypto vs. AML) and Maker

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