Dutch decentralised P2P finance platform AllianceBlock yesterday launched its own trustless identity software to underpin regulatory compliance for transfers moving back and forth across crypto and traditional finance channels.
Reducing barriers between DeFi (for decentralised finance) and traditional banking is a lucrative zone for startups to enter at a time when some of the old-school and challenger banks have started playing with decentralised currencies and technologies.
Especially bearing in mind DeFi's allure grows mainly because it's an open playing field by comparison to regulated banks (though in the EU and US tougher rules have been called for), with banks subjected to a gamut of "anti-laundering checks" and "know-your customer" processes that hold up currency transfers all too often.
Trustless identity verification (TIDV) is a blockchain-based alternative - the chain allows sets of users to receive digital identities without endangering privacy, while the financial services provider can review the user's digital information, meaning each customer only needs to fill out one KYC application, as data can be safely exchanged and stored.
To start with, AllianceBlock will let the TIDV plug-in play with its fully decentralised peer-to-peer funding platform on the chain, Fundrs, available across several blockchains including Mainnet, Ethereum and Avalanche.
Identity checks are provided by AllianceBlock's partner GBG, which aims to specialise in KYC models that "bridge the gap" from blockchain to traditional finance.
Post-checking, a hashed record with KYC data is created, but only for the intended recipient, who can confirm identity across all its services. The providing user can end consent for their blockchain hash at any time.
AllianceBlock's forward plans for TIDV include further integrations with its DeFI infrastructure, specifically its DeFI Terminal, DEX and Data Tunnel. More features are on the way, including support for hard crypto wallet devices.