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U.S. Treasury Considers Embedding Digital Identity Verification Mechanisms in DeFi Protocols

U.S. Treasury Considers Embedding Digital Identity Verification Mechanisms in DeFi Protocols

ChaincatcherChaincatcher2025/08/17 08:02
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According to ChainCatcher, citing a report from Cointelegraph, the U.S. Department of the Treasury has launched a public consultation under the GENIUS Act, aiming to explore the integration of digital identity verification tools into DeFi smart contracts to combat illicit financial activities. The proposal includes the use of API interfaces to automatically conduct on-chain KYC/AML checks, while also leveraging technologies such as biometrics to reduce compliance costs.

Banking industry groups have warned that regulatory loopholes in stablecoin interest payments could result in an outflow of $6.6 trillion in bank deposits. The public consultation will run until October 17, 2025, after which the Treasury will submit a report to Congress and may introduce new regulations.

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