Today Centre, the consortium founded by Coinbase and stablecoin company Circle, announced Verite, a decentralized identity solution to be used for cryptocurrency payments and decentralized finance jointly developed with Block (formerly Square).
For decentralized applications on public blockchains, KYC processes are impractical. However, if an organization like Coinbase verifies your identity, then you could store that credential in your wallet.
You can choose to share the fact that this wallet has been through a KYC process with a DeFi application, like a lending protocol. In theory, you can share the KYC verifiable credential while choosing not to tell the lending protocol your name. If the government wants to check you’re not a money launderer, it can go and ask Coinbase for your identity. The big question is whether regulators will be happy with this approach.
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