Integrity in DeFi

The growth of the DeFi market has been staggering. In May 2021, the DeFi market hit an all-time high, with the total amount of cryptocurrency locked surging to $87bn. Alas, most great innovations often come with a downside too. This growth combined with the fact that DeFi protocols are designed to be permissionless — meaning anyone in any country can access them without any regulatory compliance — makes it clear that DeFi has the potential to become a haven for money launderers.

One of the essential responsibilities for banks and financial institutions is to uphold the markets’ integrity. In 2020, a report by Fenergo found that sanctions sustained by financial institutions for non-compliance with Anti-Money Laundering (AML), Know Your Customer (KYC) and other primary regulations amounted to $10.6 billion globally. Updates to financial institution’s regulations to prevent criminal activity have still fallen short. However, when comparing this with cryptocurrency and decentralized finance regulations, they are still more robust. One of the main hurdles that DeFi and digital assets have to overcome is the profitability of the market to money-launders.

Updates to crypto-exchanges may be difficult, as it means more expensive on-boarding, user-developer friction, and vulnerability to data breaches. A 2020 study by blockchain analysis firm CypherTrace, found that nearly 56% of all cryptocurrency exchanges have extremely weak or no KYC regulations at all, an essential building block in more secure AML solutions.

Astra allows DeFi protocols to comply with the inevitable regulation without compromise.

As the crypto market gains mainstream traction, increased compliance has become inevitable. The route that the community can take is through embracing appropriately tailored regulation procedures while maintaining its essential decentralized nature.

ASTRA is the solution! Decentralized organizations will be able to use ASTRA as the decentralized compliance layer without requesting and storing KYC information themselves whilst simultaneously reducing the risk of fraud and criminal activity.

ASTRA is the key that can unlock the door to institutional adoption.