PureFi Protocol

Decentralized Finance (DeFi)  has become more and more popular in the past few months. DeFi refers to all financial technologies that use blockchains and cryptocurrencies with the same aim in mind: to make cryptocurrency decentralized and independent from regulation by any financial agencies.

Decentralized Exchanges (DEXs), yield farming, stablecoins,  lending platforms, wrapped coins and prediction markets are the most popular DeFi projects. The Ethereum blockchain serves as the base for the majority of applications.

DEX (decentralized exchange) is a blockchain-based peer-to-peer (P2P) online service that allows users to make direct cryptocurrency transactions between each other. DEXs don’t require users to pass know-your-customer (KYC) and are not custodian entities, unlike centralized exchanges. DEXs only provides the protocol that enables transactions. To be clear, users can easily create wallets and start trading without disclosing personal data.

According to the statistics, by Q1 '21 the overall monthly trade volume has almost tripled compared to the one as of December 2020 ($25 billion). The average daily DEX trade volume grew from $0.71 billion to $2.26 billion — a quarterly rise of 318%. Uniswap, the most popular DEX at the moment, had more volume than Coinbase, the most credible Centralized Exchange of the whole cryptomarket.

All that’s happening put DeFi under the radar of regulators and governments. Since most DeFi platforms ignore Know-Your-Customer (KYC) or Anti-Money Laundering (AML) procedures, they begin to foresee such transactions as a new haven for illegal activities.
In this context, the FATF declares to the G20 that jurisdictions must update requirements in order to implement AML/CFT mitigating measures. Furthermore, a new draft of the European Commission MiCa could restrict EU citizens from accessing DeFi projects. At least if they do not agree with the proposed strict legal regulations.