KYC will never be friends with DeFi Protocols

KYC or know your customer is a process that has been followed by financial institutions to have more information about their customers. This is about the customer that includes their identity along with the address and personally identifiable information. All the Financial Institute follow this protocol to ensure that they have provided the option to use the services by real users and if in case there is any abuse or misuse then they can find the person who was involved. This happens in the traditional financial system but crypto is different because in crypto decentralisation is the key.

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In the rypto space, people often go for decentralisation because they don't like the way how the banking system and the financial institutions are working and this is why crypto is the place where they can control their funds without the involvement of any intermediary. This is something that can give better options to the people and this is why a lot of people are coming to crypto. There is a segment called decentralisation finance where people can park their funds on certain protocols and earn like they do withthe banking system. The only difference they can see is that in Defi they need not follow any rules defined by any centralised entity. They also need not declare their identity and they can play anonymously whereas this is not a possibility in the traditional banking system.

This is the reason why the KYC process will never be a good-to-go option for people who are on such decentralised finance protocols because people don't like to share about themselves. People like their money to be managed transparently while not losing control over it but when they go on the traditional banking system then it is not possible and they have to declare their identity and give the funds control to the institution.

For centralized crypto exchanges like Coinbase and Gemini, KYC rules have long been a fact of life. Platforms like these are registered businesses with identifiable owners, so they comply with KYC regulations to stay in the good graces of governments.

If we take the example of centralised exchanges that are operating in the crypto space also people have to go through the KYC process however that is not a requirement for decentralised financing. Decent lies finance means people can invest their money without going through KYC and if I'm not sure then there are a few platforms that are going through the KYC process or some sort of majors to follow AML practises. As of now I'm not able to call out the names of those platforms but I have read somewhere that something like this exists however my opinion is different.

I believe that there should not be any KYC process for people who are part of the decentralised finance and this segment itself should be open for everyone where anyone can become part of the protocol without going through any personal identity verification. This is why I say that KYC will never become a friend with any protocol following the logic of decentralised financing.

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