Solving Compliance for Web3 Balázs Némethi

hello everyone um i guess it's a topic that's like doesn't resonate with everyone and i will try to make it like as light as and as fun as possible um but generally speaking regulations are coming to the space so it's also a good thing because the space has been recognized but it's also something that projects and protocols will have to start dealing with where they're going fully decentralized or whether considering doing some level of compliance and better understanding what regulations will apply to them i think like the less the regulations the faster the industry moves but moving fast sometimes break things and just a couple of examples of like regulations i'm talking about that's already be known so estonia introduced the vsp rules um the eu the mika rules india introduced the tax on crypto china completely banned crypto and and the white house under biden is like pushing to come up with some regulations to look at the industry from one way or another let's see how that goes well but why is it happening so there has been a couple of hacks as some of you might have been there some of you have watched it read about on twitter or actually lost money there has been rock pools there has been interesting icos promising everything and and in the eyes of regulations there is just so much volatility where people are who are not used to seeing 30 40 percent drops in one day might lose a lot of money and so compliances and regulations are not always about like limiting industries it's also about protecting whether that's protecting them or protecting the users it's always a question because let's not forget that the biggest wheels in the game are the banks and they control a lot of this topic they have an internet interest to not go and disappear and what all of you are doing is actually potentially you can make them disappear so they are very important and and we have to understand that and not just say that all banks shouldn't exist i'm pretty sure everyone in this room has a bank account so crypto came a long way on the corridor i've been talking with people that those who have been in the space for very long there are just so many new faces but three years ago everyone wanted to have a bigger crypto now crypto is bigger so we have a lot more new faces but because that we actually have a lot more interest in crypto and a lot of different players are looking at it from their perspective but crypto has more than just a couple of thousand bitcoins a couple of hundred thousands of tokens and a couple of millions of nfts because because crypto is not just money uh and crypto or vat 3 as you want to say it is like is like a crazy thing that we are all building everyone has their own agenda have their own interest whether that's positive for the community or a very personal interest everyone is very passionate about crypto and this passion is really driving our industry to move very quickly test fail and improve because it's all happening in the open so we can learn from each other so mistakes are often only done once and we have achieved a lot of things like incentive design or token engineering or this term of of working with incentives beyond advertisement has didn't exist 10 years ago the concept of zero knowledge proof did exist but with the money that's going around for icos sometimes the money actually find the developers who are working on amazing things like zero knowledge proves it just immensely can improve privacy it's it's getting better there are projects that are pushing the boundaries of what's possible but but it would be impossible without the money in crypto and most importantly we are building friendships that's global that doesn't see anymore the borders that may not see regulations but that create these immense communities that for the past year has been gathering under daos and and this sort of community effort is really what makes crypto unique industry because instead of like competition there is really a lot of collaboration going on because everyone understands that building it in the open is much faster if we do it together than if we do it parallel to each other and crypto is just everything um if you look around the room um i'm pretty sure you already know the people around you but like everyone has their own thing and it's and it's crazy on the other hand crypto is risky it is extremely complex and the further down you go the rabbit hole the more you understand that you don't understand it and and crypto comes with a lot of loss i'm pretty sure everyone has lost money in their room maybe those who are watching not that much but i'm pretty sure that those who are in the room and attending eat denver in person has gone through some serious losses or even lost money because they got rock pooled so like what we are doing and why i really want to talk about compliance because we have to collaborate um the big difference between a fintech and the crypto project when it comes to compliance that you can launch a fintech in one country you need to meet with one regulations then you extend to another country and you can build up your compliance mechanism to another country in crypto when you launch a product and you try to be compliant maybe not today but in two years we will see a lot of regulations you will have to be compliant in a global scale because your users will come from everywhere and that's something that a small project will won't be able to deal alone it will have to collaborate with other projects because it is very complex and it's not going to get less complex and the aml will be there on the money laundry so regulations are not so bad what they do is that they open the doors open the doors for those people who might be more risk-averse who might be not yet a degen who might only heard about crypto or yield farming or staking but they never dare to try because high transaction fees the all the negative stands that are around the industry but if there are regulations then a lot more players in the regulated industries will be able to enter crypto and bring their users so either we wait for the regulator regulations and be surprised that our industry or segment of the industry in our country gets regulated or we go ahead just like big tech did and start to self-regulate and show the industry or show the regulator sorry that we can do it and we can do it better because we understand what needs to be done we understand that not everything web 2 kind of regulations could apply and we can build tools and solutions that actually protect our users protect our community but it enables the next billion people to take the pill and get into crypto so the project i'm working on is called kyc dao and and we are aiming to bring on chain kyc a reality um i know kyc is a term that doesn't have the most positive aspect in the world so we will try to make it very simple and i don't ask you to do kyc on the wallet you use every day i don't ask you to do it on your second wallet i ask you to make a new wallet and make a kyc on it because if there will be gated services that try to be compliant you might want to participate in it also you might be paying taxes so you can just do that it is it is but it's something that can meet the regulatory requirements as anti-money laundry and kyc will be part of the puzzle um one way or another so what we are building is basically a solution where you can mint yourself a non-transferable nfd or a soulbound nfd that proves that you are verified um it will be a multi-chain solution so you can pick your chains that you prefer to use these on you can mint it on multiple chains and what the nft will actually contain is just really basic information of what level of verification you have passed when it will expire and whether it's valid or not you will be able to mean these on multiple chains and the goal is to make it as native as possible and as easy to scale as possible so you can use the second wallet a third wallet or your primary wallet or all three because you will be able to connect multiple wallets and mean the same nfds across them the point of this is that it's a permissionless system you own your verification um you can go everywhere and you can just avail technically it's attached to your blockchain address that you are verified and services can just consume this verification and as long as they trust our processes and compliance mechanism they will be able to just onboard you to a service that they can start consider compliant or they can use it for proof of humanity or like a number of other cases it's reusable and and you can just build on it so a couple of ideas like what we are looking at where it could be used is is sort of the taos building just communities where everyone is a human there are no bots to vote for certain topics interestingly you will be probably able to build compliant d5 products even though that's a little bit more complex but we are working towards it um on and off ramps i don't know how many of you actually used an on-ramp instead of a centralized service but you do need to do a kyc very often so if you can bring your own kyc you could just make that much simpler and smoother therefore a lot more people with bank card could join certain services we have heard of the fraud that's going on in the nfd space where free minting has generated immense amount of ip issues whether it's a good thing or not disney and and the others are definitely not happy about it and they can force these companies enabling your nft trading to reconsider how they do it um and you can trust founders they don't you don't need to know who is the founder but they can just show you that they did a verification so they can't really just disappear into the abyss with your funds so therefore like the idea is just to make compliant build possible easy and as crypto native as po as it's as we can think of and basically today we launched our website so if anyone is interested to get in touch with us or join the waitlist to get the first verification then you can go to kyc dot xyz and you can register if you have an idea for a project i'm also very available here or on discord to talk about it if you want to argue whether it's a good idea or not i'm also here if you want to argue about the idea where verifiable credentials or nfds are the solution i'm also here i worked for the decentralized identity foundation for the for the past so i have i have good idea about um and generally like i'm not advocating that compliant compliance have to come i'm saying that it's coming like and either we do it together or small project will face tremendous amount of problems when trying to be compliant that would have been my presentation so go to the website and i'm open for questions because i do think i still have some time