Although decentralized finance (DeFi) is expected to be an improvement on traditional funding mechanisms, some believe that denying users access to decentralized exchanges based on their wallets is a step backwards.
In a tweet, businessman Brad Mills critical DeFi for denying users access to decentralized exchanges (DEXs) due to various factors such as location and wallet content. Because of this, Mills described the future of Web3 as a “surveillance panoptic” and said it has rebuilt everything bad about Wall Street but on a blockchain.. Within the tweet, Mills also shared an image of a 1inch Network decentralized application (DApp) pop-up message restricting access due to the wallet address used.
It’s a statement, Sergey Maslennikov, the head of communications at 1inch, told Cointelegraph that the wallet restriction is part of their efforts to provide a safe and compliant community environment. Maslennikov explained that:
“User wallets that are owned by or associated with clearly illegal behavior such as: sanctions, terrorist financing, hacked or stolen funds, human trafficking, and child sexual abuse material (CSAM) are not allowed to interact with the 1Inch dApp “.
According to Maslennikov, the DeFi aggregator is compliant with all applicable sanctions and embargo lists. Aside from this, the DEX also follows the AML and Terrorist Financing prevention regulations as well as the efforts of the global community.
In the meantime, The Financial Action Task Force (FATF) recently noted that countries that ignore cryptocurrency anti-money laundering regulations may be placed on the watchdog’s gray list, which is a list subject to increased oversight.. At the moment, there are 23 countries on the list, including cryptocurrency hubs like the United Arab Emirates and the Philippines.
Regarding the financing of terrorism, a United Nations (UN) official recently highlighted that terrorists continue to prefer cash to cryptocurrencies. Svetlana Martynova, coordinator for combating the financing of terrorism at the UN, told a special meeting that although cash remains the predominant method of financing terrorism, terrorists are capable of adapting to new technologies, and this includes cryptocurrencies.
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