Us Treasury’s Defi ID plan attracts the back of intimacy

The US Treasury explores whether the identity checks should be built directly in intelligent decentralized financing contracts (DEFI), a move that criticisms warned could rewrite the very foundations of finance without authorization.

Last week, the agency opened a consultation under the guide and the establishment of national innovation for the US Stablecoins law (Genius Act), which was promulgated in July. The law orders the Treasury to assess new conformity tools to combat illegal finance on cryptographic markets.

An idea was to integrate identity information directly into intelligent contracts. In practice, this would mean that a DEFI protocol could automatically check the government’s government ID, biometric identification information or digital portfolio certificate before authorizing a transaction to continue.

Supporters argue that the building knows your customer (KYC) and anti-flowing checks (AML) in blockchain infrastructure could rationalize compliance and prevent Defi criminals.

Fraser Mitchell, product manager at supplier AML Smartsearch, Cintelelegraph told that these tools could “unmask the anonymous transactions that make these networks so attractive to criminals”.

“Real -time monitoring for suspicious activity can allow platforms to more easily alleviate risks, detect and ultimately prevent money launders from using their networks to wash the product of some of the worst crimes in the world,” said Mitchell.

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Challenge verification: Protect data or risk monitoring?

Mitchell recognized the compromise of privacy, but argued that there are solutions. “Only the necessary data necessary for monitoring or regulatory audits must be stored, with everything else deleted. All data held must be encrypted in terms of lines, which reduces the risk of a major violation. ”

However, criticisms say that the proposal may widen the heart of Defi. Mamadou Kwidjim Toure, CEO of Ubuntu Tribe, compared the plan to “put cameras in all salons”.

“On paper, it looks like a careful compliance shortcut. But you transform a neutral infrastructure and without authorization into an infrastructure where access is described by the identity information approved by the government. This fundamentally changes what DEFI is supposed to be,” said Toure Cointelegraph.

He warned that if biometric or government identifiers are linked to blockchain portfolios, “each transaction may become permanent to a real world. You lose a pseudonymat and, by extension, the ability to treat unattended. ”

For Toure, the issues go beyond compliance. “Financial freedom is based on the right to private economic life. Identity integration in the eroded protocol and creates dangerous previous ones. Governments could censor transactions, black list portfolios or even automate tax collection directly through smart contracts. ”

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Who is left behind?

Another concern is exclusion. Billions of people around the world still lack formal identification. If the DEFI protocols require references issued by the government, whole communities, migrants, refugees and non -banished risk are locked.

“This can restrict access to users who prefer anonymity or cannot meet identity requirements, limiting the democratic nature of DEFI,” said Toure.

Data security is also a flash point. The connection of biometric databases to financial activity could make hacks more catastrophic, exposing both money and personal identity in a single violation.

Critics point out that the choice is not binary between crime paradise and mass surveillance. Tools for preserving confidentiality such as zero knowledge (ZKPS) and decentralized identity standards (DID) offer means of verifying eligibility without exposing a complete identity.