Bipartisan U.S. Senators Want To KYC DeFi, they have no idea how silly that sounds

In an effort to place a watchtower over your head and monitor your every damn financial operations for the purpose of taxation and control, some "Senators" have created a bill they call "CANSEE" that would require "decentralized finance protocols" to KYC your ass.

Lol.

How would that work exactly? This was the first question I asked myself. How do you turn a decentralized protocol into a KYC compliant machine that still manages to stay DeFi complaint because to remain a truly peer-to-peer protocol with no intermediary whatsoever, a KYC structure is to be avoided.

So it is back to CeFi - centralized finance I guess.

DeFi generally refers to applications that facilitate peer-to-peer financial transactions that are recorded on blockchains. The most prominent example of DeFi is so called “decentralized exchanges,” where automated software purportedly allows users to trade cryptocurrencies without using intermediaries.

Here is how the Senetors define DeFi, and does anyone else notice the use of the word "purportedly", this shows that the system views it as a "threat" and thus seek to break its design.

Introducing a bill that requires these protocols to seemingly change what they are designed to be just sounds right about it to them? It's crazy they don't seem to understand the concept of open-source and decentralized softwares, I wonder if they can KYC bitcoin, I wonder.

By design, DeFi provides anonymity. This can allow malicious and criminal actors to evade traditional financial regulatory tools, including longstanding and well-developed rules requiring financial institutions to monitor all transactions and report suspected money laundering and financial crime to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Treasury Department. This allows DeFi to be used to launder criminal proceeds and fund more crime.

Criminals, drug traffickers, and hostile state actors such as North Korea have all demonstrated a propensity for using (DeFi) as a preferred method of transferring and laundering ill-gotten gains. These bad actors have been quick to recognize how DeFi can be exploited to advance nefarious activities like cross-border fentanyl trafficking and financing the development of weapons of mass destruction.

Lol, I bet these people don't even know that Bitcoin itself is DeFi, and given the nature of Bitcoin right now, we sure as hell know that there will be no way to KYC nada, and it's pretty fucked up because the system will seemingly attempt to exempt it from all it - purportedly because it's well on its way to be the "hide away currency for the rich".

Not a lot of people understand this, first, when people talk about DeFi, they think of decentralized exchanges and DeFi investment products platforms, but this isn't DeFi, literally, it is part of it, just not it all.

DeFi is a concept, so whatever system that its design supports that concept is DeFi, bitcoin is DeFi because it facilitates peer-to-peer transactions - at least to some extent if we want to ignore the fact that miners are by design "group of intermediaries" with control over what gets on the ledger, but that aside, it still fits the concept by these popular opinions of what DeFi is.

But the system as we know it, isn't after that, because Bitcoin isn't a threat to the banking system, of course, this is debatable but it is a fact, bitcoin cannot compete with the banking system in its glorified state, it isn't designed to, but on the other hand, what we often call out to be DeFi asín "DeFi protocols" like MakerDAO, Pancakeswap, Uniswap, platforms like this threaten the traditional finance system.

Why?

Well, they can quite easily deploy all traditional finance products and services on-chain while eliminating the need for all those boring paper works that are aimed at placing an eye over your roof for the rest of your life.

So it is only understandable that this is the DeFi they intend to break, but they are incredibly wrong about so many things, in fact, the next quote will prove how much of a clown these people are.

According to the most recent U.S. National Money Laundering Risk Assessment: “DeFi services often involve no AML or other processes to identify customers.” According to another recent Treasury Department report, “illicit actors, including ransomware cybercriminals, thieves, scammers, and Democratic People’s Republic of Korea (DPRK) cyber actors, are using DeFi services in the process of transferring and laundering their illicit proceeds. To accomplish this, illicit actors are exploiting vulnerabilities in the U.S. and foreign AML regulatory, supervisory, and enforcement regimes as well as the technology underpinning DeFi services.” source.

Notice the use of the word "Customer", now who is a customer?

Here's how ChatGPT defines a customer:

A customer is an individual, group, or organization that purchases goods or services from a business or a seller in exchange for payment.

How is it that Senators cannot see the clownery in all this?

In case you don't understand this, when the word "customer" is being used as a "reason" crypto protocols become effectively exempt from all these bullshit laws.

Why? They are no such things are "customers" when it comes to crypto blockchains and DeFi as that is the center of this all because firstly, there is no company and secondly, nothing is being sold to anyone for another single entity to profit(looking at the definition of who a customer is).

Clear? You see, if I manufacture a car, then market it, someone buys it, I make a profit, that qualifies as a transaction where I need to "Know My Customer".

But when I basically just own a field for example and others came to sell cars to people, I make no profit from this, this doesn't qualify because I didn't create what is being sold and definitely make no money from it.

From this analogy, decentralized exchanges for example if they stay true to their design do not owe nobody KYC compliance because to start with, they don't have "customers" they are not a company as a protocol and make no money from this protocol.

People who make money from these protocols are those that hold the tokens that yield interest from fees, and this could include the team of developers of the protocol and so many others, so it really doesn't count.

It's pretty fucked up and funny, these people will never get to centralize this shit, it is practically impossible, they will have to change even the definition of English words and so many laws to get there.

DeFi protocols don't have customers as such cannot perform KYCs for what they don't have, period.