Know Your Peer — The pros and cons of KYC

Josef Je, co-founder of PWN DAO, argues that crypto should move from "Know Your Customer" toward "Know Your Peer," using selective verification and privacy-preserving tools in place of full identity checks across DeFi. He says KYC grew out of anti-money-laundering efforts, starting with the US Bank Secrecy Act of 1970 and the FATF's 1989 recommendations. He acknowledges KYC can build legitimacy and help enforce ownership of real-world assets, but says it is an outdated fit for DeFi protocols and creates data-honeypot risks. He points to zero-knowledge proofs, reputation systems and tools such as Chainalysis as alternatives.