What Is the Role of a Decentralized Identity (DID) System in Preventing AML/KYC Breaches?
A DID system allows users to own and control their verifiable credentials (e.g. a KYC check) without storing them on a central database. For a decentralized stablecoin, a DID system could allow a user to prove they have completed KYC to a regulated front-end, enabling access to certain services while keeping the core protocol permissionless and preserving user privacy.