Dmitry Machikhin, CEO of BitOK, comments on the inclusion of Uniswap’s KYC hook and reiterates its essential role in avoiding regulatory pressure and championing the move towards compliance in the crypto sector.
Uniswap introduces KYC
A hook was found in the open directory of the decentralized finance (defi) protocol Uniswap V4 that is intended to complete the KYC (Know Your Customer) procedure.
One of the features of Uniswap v4 will be the use of hooks. These are tools that allow developers to modify code without changing the main version of the program. These plugins are expected to help implement new functionality for liquidity pools. For example, limit orders and individual on-chain oracles.
According to the description in the catalog, the KYC hook is used to verify the identity of customers before trading on the decentralized exchange Uniswap.
Source: UniswapHooks
Now there is no need to undergo such a check. To use Uniswap, users simply need to connect their wallet and proceed with the operations.
Some X (formerly Twitter) users commented on the recent changes, suggesting that the protocol could be subject to scrutiny from regulators after the new feature is implemented.
❤💛💚💙
Disappointing NEWS:
Uniswap is releasing KYC verification in the form of a hook for Uniswap v4.
UniswapX also uses an off-chain “permission required” server.
It starts as an “option” and then we all know how it ends…
Uniswap is Fake DeFi.
👎🏻👎🏻👎🏻 pic.twitter.com/1h0BqOsufd
— yourfriendSOMMI ❤️💛💚💙 (@yourfriendSOMMI) October 14, 2023
If users refuse verification, they will not be able to use certain features. And their actions could be viewed as illegal money laundering.
Mandatory KYC in Crypto: Expert Opinion
Many centralized exchanges have already introduced mandatory KYC verification. In May, Bybit introduced mandatory identity verification for all platform products and services.
KuCoin introduced similar requirements in July 2023, introducing mandatory identity checks for all new users in line with global anti-money laundering regulations. OKX and Bitget have done the same.
Dmitry Machikhin, founder and CEO of crypto tax and portfolio tracking BitOK, told crypto.news that there is nothing wrong with implementing basic KYC/AML policies on crypto platforms. In his opinion, it can protect most law-abiding users who are not here to launder money and make it harder for shady participants to legitimize ill-gotten gains.
However, Machikhin also noted that Uniswap and other decentralized exchanges (DEXes) may not survive the regulators’ crackdown if they do not implement similar measures.
“Either it is, or Uniswap will not survive the raid. It sets an example and signals that it is either following the rules or operating in the illegal zone. The market is likely to shift towards compliance. The gray area is slowing down crypto development. You can’t get rid of the illegal zone; it will always be there. But you can get rid of the gray area.”
Dmitry Machikhin, founder and CEO of BitOK
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