Uniswap V4 KYC Hook Sparks Controversy Among Crypto Users

by Oct 16, 2023CryptoNews0 comments

A new feature that allows users to verify their identity before trading on Uniswap V4 pools has triggered a heated debate among crypto enthusiasts. The feature is a hook, which is a tool that lets developers customize the code of a program without changing its core structure. The hook, which is available on an open-source directory for Uniswap V4 hooks, enables Know Your Customer (KYC) verification on the decentralized finance protocol.

KYC is a process that financial institutions use to verify the identity of their customers and assess the risks associated with them. KYC aims to prevent money laundering and terrorist financing activities. The KYC hook code is shown on GitHub .

The KYC hook was created by a community developer as an optional functionality for Uniswap V4. The KYC verification is done by using a nonfungible token (NFT). However, some users on X (formerly Twitter) criticized the hook, arguing that it opens the door for regulatory interference in DeFi. One user said that the hook could lead to a scenario where non-KYC transactions are labeled as illegal or terrorist money laundering .

On the other hand, some users defended the hook, saying that it is specific for liquidity providers and may be useful for projects that need to comply with legal requirements in certain jurisdictions. Another user said that hooks can be made by anyone and that Uniswap has done more than anyone else for “real DeFi”

Governments around the world are paying more attention to DeFi protocols and transactions. Recently, the G20, which is a group of 20 major economies, accepted a crypto regulatory roadmap proposed by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) that tightens crypto regulations

See also  New stablecoin legislation is to be introduced in the U.S. Congress

Uniswap V4 introduces customizable hooks and is expected to be launched in early 2024, with access limited to governance-approved entitieshttps://cointelegraph.com/news/kyc-hook-uniswap-v4-stirs-community-controversy. Magazine: Recursive inscriptions — Bitcoin ‘supercomputer’ and BTC DeFi coming soon

source : cointeleghraph

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