Amber Ghaddar, the founder of AllianceBlock, spoke on bridging the gap between decentralised and centralised finance. She stressed that DeFi needs to be self-regulated, but with rules created in conjunction with governments.
Founder Dr Ghaddar said AllianceBlock was formed to bridge the gap between DeFi and traditional finance with next-generation financial infrastructure products.
In exploring whether DeFi should be regulated by governments, Ghaddar stressed the importance of self-regulation to achieve adoption and longevity.
“We have to remember that crypto is still a nascent industry with an infrastructure that is quite different from traditional finance, and right now, most governments don’t have a sufficient level of understanding to implement effective policies,” she noted.
“You cannot blindly apply one single set of laws and provisions to decentralised technology – it’s too unique and new to be put under one letter of the law.
“It could be argued that regulator’s lack of understanding is partly the fault of the DeFi industry itself for not ironically ‘centralising’ efforts to not only lobby but also explain to key stakeholders how DeFi protocols actually work.”
Moreover, Ghaddar said that world leaders don’t need to be taught that DeFi can have numerous benefits. DeFI is not here for tax evasion or to launder money, “as some seem to believe”.
She recalled the recent introduction of the Infrastructure Bill in US which included tax reporting provisions that apply to cryptocurrencies.
“A major consequence of this bill is that it has driven the decentralised crypto community to begin to centralise their effort to lobby and work together,” she said.
Trustless KYC/AML and Identity Verification
According to the fact that the burden of compliance for institutional players is huge, Ghaddar explained AllianceBlock – which recently launched its DEX on testnet on two major blockchains, Polygon and Energy Web Chain – has focused on regulatory compliance, which is one of three layers in its protocol.
“This plays a huge role in giving institutional investors adequate compliance solutions,” Ghaddar said, adding that KYC and AML were a necessity.
“Banks that have inadequate KYC and due diligence regulations face fines that run into the billions for enabling illegal activities, while the cost of keeping up with compliance is extremely high,” she explained.
“For individuals to get involved, they must go through a number of KYC checks for each institution they sign up to, creating a large data footprint that must be managed in a compliant manner with legislation like GDPR.”
Ghaddar reiterated AllianceBlock aims to solve these issues by providing a solution that enables institutions to reduce their compliance burden, while still enabling them to meet all of the regulations they must adhere to.
“The AllianceBlock Trustless KYC/AML and Identity Verification product allows institutional and retail players to prove their identity in a trustless manner while letting them retain control of their data,” she added.
She continued to explain the product can be used by both traditional legacy institutions as well as DeFi firms as an alternative to the current KYC processes currently on offer.
“AllianceBlock offers an improved, more cost-effective and more trustworthy solution to everyone, helping bring the traditional and decentralised financial worlds closer together,” Ghaddar asserted.
Financial Insfrastructure for Centralized and Decentralized sector
She also stressed that AllianceBlock’s mission was to bridge the gap between centralised and decentralised finance (DeFi), while also remedying issues in both industries.
“Long term, we want to create a new financial infrastructure combining these two industries and we are already beginning to deliver our mission,” she commented.
“Through our products and protocol, financial actors can access new opportunities to trade digital financial products legally, safely, securely, and in a fully compliant manner.
“Our unique ecosystem will merge traditional and non-traditional finance, offering the best of both worlds, creating a hybrid ecosystem founded on our belief that compliance and decentralisation are the bedrock of the future of finance.”
When talking about the legitimacy of the whole concept, Ghaddar emphasised AllianceBlock was compliant by design.
“We are building a next-generation financial infrastructure that aims to provide regulated financial entities around the world with the tools they need to seamlessly access the DeFi space,” she concluded.
“Our cross-border compliance rules engine is designed to simplify cross-border activity and ensure full compliance when traversing financial borders.”
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Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
