The Ultimate Guide For DeFi KYC

Smita Verma
3 min readSep 7, 2021


Decentralized ledger technology applications have shown great promise in recent years for several areas, particularly financial services. Decentralized finance has been recognized as one of the most recent applications of blockchain technology in the field of finance. Financing Inclusion (DeFi) has fundamentally rewritten the rules for financial inclusion and paved the way for new financial service ecosystems. DeFi training is on the rise with many enrolling in DeFi certification courses to get started with.

DeFi guarantees that anyone with a smartphone and an internet connection may access financial services without having to provide any evidence of identification. So, why is DeFi KYC needed? When it comes to the world of DeFi, asking for KYC (Know Your Customer) processes may seem out of place, as DeFi’s primary goal was to reduce the need for KYC processes in banks and financial institutions. The connection between DeFi and KYC, on the other hand, has far-reaching consequences for DeFi as a whole. Let’s take a look at why KYC is required for DeFi.

The DeFi KYC: Why Do You Need It?

As a result of the absence of government and financial middlemen, financial services were available to anybody who wanted them. This, however, proves to be one of DeFi’s worst disasters. DeFi has a lot to consider when it comes to data security and compliance with prospective new rules that might introduce new dangers. DeFi doesn’t require KYC, it needs to know what KYC can accomplish for DeFi. It has a dramatic influence on a DeFi solution provider’s choice to adopt KYC.

In the DeFi landscape, every entrepreneur or newly established business will naturally desire a favorable legal position. Citing new laws will help them attract institutional as well as corporate clients. Will the combination of DeFi and KYC, on the other hand, cause DeFi to crumble?

There are several reasons why this may not be an issue. Even while DeFi’s inherent value may be diminished by the new KYC and AML requirements, this does not necessarily indicate that it will. KYC in DeFi is possible because of the decentralized approach to financial services.

Personal Data Security

A major worry with decentralized KYC is the insecurity of personal data, which may be accessed by anybody. If consumers are reluctant to provide their KYC data because of the openness of decentralized finance, they may be discouraged from doing so. When faced with such a circumstance, new KYC technology can help you.

Identifiable data would not have to be transmitted to or kept on a DeFi app, VASP, or portal. Using KYC-Chain, potential consumers might be subjected to end-to-end KYC evaluations. A curious fact is that the DeFi service provider’s database does not include any of the customer’s information at all.

Wrapping up

For DeFi, weak KYC processes may spell disaster. DeFi all-inclusive financial services enable, it may become a money-laundering tool. Criminals can utilize DeFi services without KYC evidence due to the lack of rules and anonymity. As a result, they may easily dodge money laundering restrictions.

When the money is used to fund criminal activities like drug trafficking or terrorism, what happens? There are several reasons why KYC in DeFi will become the new standard in decentralized finance. Check back often to learn more about DeFi and how KYC can revolutionize the way it’s done in the world today. Enroll in the DeFi course and secure a DeFi certificate, for it will give your career a major boost.



Smita Verma

Blockchain enthusiast and cover everything that goes on in the crypto ecosystem. I love researching and producing technical content on blockchain.