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Can a Truly Decentralized Stablecoin Comply with AML/KYC Regulations?

True decentralization conflicts with the centralized authority needed for mandatory AML/KYC enforcement, creating a regulatory gap.
Greeks.Live21.11.25

Can a Truly Decentralized Stablecoin Comply with AML/KYC Regulations?

Full compliance is challenging for truly decentralized stablecoins because they lack a central authority to enforce KYC/AML checks on users. Regulations typically require an identifiable entity responsible for monitoring transactions and reporting suspicious activity.

Some stablecoins employ "hybrid" models with on-ramps/off-ramps that are centralized and perform checks, but the core protocol remains permissionless. The regulatory landscape is evolving, with some proposals suggesting that decentralized autonomous organizations (DAOs) or protocol developers could be held accountable, though this is legally complex.

How Does the Need for Decentralization Conflict with Corporate Governance Structures?
Does the “Know Your Customer” (KYC) Rule Apply to the Enforcement of Fiduciary Duty?
How Does Regulatory Scrutiny Change for Projects with Anonymous Teams?
How Does Decentralization Affect the Regulatory Oversight of Public Blockchains?

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