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Abstract

This project is focused on solving the problem of Know Your Customer (KYC) / Anti Money Laundering (AML) checks for DeFi. We created an on-chain NFT solution that allows user validation via Chainlink to obtain up-to-date KYC/AML checks from ComplyCube KYC service provider. At the time of writing this is the only industry solution that permits point-in-time KYC/AML checks via smart contracts and blockchain technology.

Regulatory Context Presents a Unique Opportunity

One of the main concerns of regulators, traders and money managers in crypto, is the current state of AML, particularly in DeFi. The fact that bad actors can easily launder funds is a huge issue. Not just for wannabe tradfi investors, but also for society as a whole.

Several notable key figures* and have spoken out about KYC/AML concerns in cryptocurrencies, particularly with attention to DeFi. Whilst some of these individuals have strong anti-crypto sentiment, we cannot dismiss the united front shown by all major regulators. It is clear that regulation is coming. We believe our project preserves the integrity of DeFi whilst satisfying the concerns of regulators.

Aside from regulation, there are vast sums of institutional money that cannot currently relocate to crypto due to the KYC/AML concerns posed by the DeFi space. DeFi represents 5% of the total crypto market [7] and is rapidly growing. Global assets under management (AUM) are currently $100Tr [8] predicted to reach nearly $150Tr in 2025 [9]. We anticipate that institutions could readily relocate between 2-5% into crypto if blockers such as AML are no longer a concern. This has huge ramifications for the size of the (currently $74bn [11]) crypto asset management business.

*Janet Yellen (Secretary of the US Treasury, ex-Chair of FED) [1], Gary Gensler (Chairman, SEC) [2], Christine Lagarde (President, ECB) [3], Dan Berkovitz (General Counsel, SEC; ex-Commissioner, CFTC) [4], Andrew Bailey, (Governor, Bank of England) [5] & Joe Biden [6]