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Aave’s Push for Institutional DeFi Gets Second KYC Provider Proposal

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1 year ago

Securitize, a technology provider for issuing tokenized securities, is bringing its system of identity verificationto decentralized finance (DeFi) as the world of “degens” inches closer to Wall Street.

The firm, regulated by the Securities and Exchange Commission (SEC) and a holder of U.S. broker-dealer and alternative trading system (ATS) licenses, proposed its know-your-customer (KYC) solution to DeFi lending platform Aave on Friday.

A community vote among stakeholders in Aave Arc, a KYC-compliant and institutional-grade version of the DeFi lending platform, will take place over the weekend (a similar process to when Fireblocks sought to become a whitelisted custodian). Following the preliminary voting and feedback, a final submission of the so-called “Securitize iD” tool is targeted for mid-January.

Global anti-money laundering watchdog the financial Action Task Force (FATF) has been explicit about DeFi players being held to the same standards as other “virtual asset service providers” like exchanges and over-the-counter trading desks.

At issue is the need to identify who is interacting with lending and borrowing platforms and liquidity pools. Crypto’s built-in pseudonymity prevents institutions from aping in; the Holy Grail is preserving privacy while allowing verification of who you are in real life.

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