The U.S. Treasury explores incorporating identity verification into smart contracts, raising concerns about undermining the core of DeFi

ChainCatcher news, according to Cointelegraph, the U.S. Treasury is exploring whether to incorporate identity checks directly into decentralized finance (DeFi) smart contracts, with critics warning that this move could rewrite the fundamental basis of permissionless finance.

Mamadou Kwidjim Toure, CEO of Ubuntu Tribe, stated that this initiative seems like "installing cameras in every living room," which could ultimately undermine the core of DeFi by transforming a neutral, permissionless infrastructure into one that requires government-approved identity credentials for access.

However, supporters argue that establishing Know Your Customer (KYC) and Anti-Money Laundering (AML) checks within blockchain infrastructure can simplify compliance and keep criminals at bay.