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US Treasury’s DeFi ID Plan Sparks Privacy and Decentralization Concerns
The U.S. Treasury is weighing a controversial proposal that could fundamentally reshape decentralized finance (DeFi). As part of its new mandate under the GENIUS Act, the Treasury is exploring whether identity checks should be embedded directly into DeFi smart contracts. While supporters argue this could block illicit finance, critics warn it risks turning permissionless systems into government-gated networks.
The Proposal
- Under the GENIUS Act, signed into law in July, the Treasury must evaluate new compliance tools for crypto markets.
- One idea: require DeFi protocols to automatically verify government IDs, biometrics, or digital wallet certificates before allowing transactions.
- Proponents say this would integrate KYC/AML checks directly into blockchain infrastructure, making it harder for criminals to exploit anonymity.
Fraser Mitchell, Chief Product Officer at AML provider SmartSearch, noted:
“Real-time monitoring for suspicious activity can make it easier for platforms to mitigate risk and prevent money launderers from using their networks.”
Privacy and Surveillance Risks
Critics say embedding ID at the protocol level could hollow out the essence of DeFi:
- Mamadou Kwidjim Toure, CEO of Ubuntu Tribe, compared it to “putting cameras in every living room.”
- Tying blockchain wallets to government IDs risks making every transaction permanently traceable to real-world identities.
- This could open doors to censorship, blacklisting, or even automated tax collection directly through smart contracts.
Toure warned:
“Financial freedom relies on the right to a private economic life. Embedding ID erodes that and creates dangerous precedents.”
Exclusion and Security Challenges
- Billions of people worldwide lack government-issued ID. A hard requirement could lock out refugees, migrants, and the unbanked.
- Data security risks escalate if biometric and financial data are linked—making breaches catastrophic.
Alternatives Exist
Experts argue the choice isn’t between crime havens and mass surveillance.
- Zero-knowledge proofs (ZKPs): Users can prove compliance (e.g., over 18, not sanctioned) without revealing identity.
- Decentralized Identity (DID) standards: Allow users to hold verifiable credentials and selectively disclose only what’s needed.
Toure summarized:
“Instead of static government IDs, users should hold verifiable credentials they selectively disclose.”
The Bigger Picture
The Treasury’s DeFi ID plan raises urgent questions:
- Can compliance be achieved without dismantling DeFi’s open, permissionless foundations?
- Will embedding government-controlled identity tools erode decentralization and limit financial freedom?
- Or can privacy-preserving technologies provide a middle path that balances security with autonomy?
As the GENIUS Act unfolds, these debates may determine whether DeFi remains a tool for global financial inclusion—or evolves into a tightly surveilled extension of traditional finance.
@ Newshounds News™
Source: Cointelegraph
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“Good Sign” as Asset Managers Update XRP ETF Applications Following Ripple Court Resolution
The race for a spot XRP ETF gained momentum after several major asset managers filed amended applications with the U.S. SEC on the same day—just as a federal appeals court officially closed the Ripple case.
Multiple Updates Signal Progress
On August 22, CoinShares, Grayscale, Canary, Franklin, WisdomTree, Bitwise, and 21Shares updated their S-1 filings with the SEC for spot-based XRP exchange-traded funds (ETFs).
- The amendments introduce greater structural flexibility, including allowing XRP or cash creations and cash or in-kind redemptions.
- Analysts suggest the changes likely reflect direct SEC feedback, potentially increasing approval chances.
Analysts Call It a “Good Sign”
Bloomberg ETF analyst James Seyffart said the coordinated filings strongly suggest issuers are responding to regulator guidance, calling the move a “good sign.”
Similarly, Nate Geraci, President of NovaDius Wealth Management, emphasized that simultaneous updates are a positive signal that the applications are advancing in the SEC review process.
Legal Clarity Removes Barriers
The timing coincided with the Second Circuit Court’s approval of a joint request by Ripple and the SEC to withdraw their appeals—effectively ending the long-running case.
Community figure All Things XRP argued the decision puts XRP in the same regulatory category as Bitcoin and Ethereum, clearing a key legal hurdle. He estimated that XRP ETF approval odds may now be as high as 95%.
Following the news, XRP surged to $3.08, with trading volumes spiking as whales accumulated large amounts of the token.
XRP’s Path Mirrors Bitcoin’s ETF Journey
Observers note that XRP is now following a trajectory similar to Bitcoin’s:
- Regulatory clarity.
- Wave of ETF applications.
- Price rally fueled by institutional demand.
With the SEC facing an October 2025 deadline to decide on several applications—including those from Grayscale, Bitwise, and 21Shares—analysts believe approval could spark billions in institutional inflows.
Although BlackRock has yet to file, estimates suggest existing issuers could attract over $5 billion into XRP ETFs if approvals move forward.
@ Newshounds News™
Source: The Crypto Basic
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Gemini About to Launch the World’s First XRP-Linked Mastercard
Gemini has ignited speculation with a bold billboard hinting at an XRP Mastercard launch on August 25, sparking excitement across the crypto community and fueling a sharp rise in XRP’s price.
A Teaser That Turned Heads
The buzz began when Gemini shared an image of a massive New York City billboard reading “Prepare your bags” alongside the date August 25, 2025.
- The cryptic message immediately triggered theories of an XRP-branded Mastercard, though no official confirmation has been made.
- Gemini already offers a crypto rewards card, leaving some skeptical while others view this as a major step toward XRP’s mainstream adoption.
Ripple, Gemini, and Mastercard: A Possible Alliance
Unverified reports suggest a potential partnership between Ripple, Gemini, and Mastercard, with WebBank as the likely issuer to meet U.S. compliance requirements.
- John Deaton, a prominent crypto lawyer, suggested the card could outperform existing crypto-linked payment cards.
- Meanwhile, veteran XRP investor WrathofKahneman urged caution, reminding the community that speculation should not be mistaken for fact.
XRP Price Surges Past $3
The speculation arrives as XRP continues its rally:
- XRP climbed 8% in 24 hours, reaching $3.04, and outperforming Bitcoin.
- The surge follows a major milestone—the joint dismissal of the long-running SEC lawsuit against Ripple, which restored legal clarity to the token.
- Growing anticipation of an XRP ETF has also bolstered momentum, with many predicting significant institutional inflows if approved.
Why This Matters
If confirmed, the Gemini XRP Mastercard would mark a historic breakthrough for XRP’s real-world adoption, blending crypto payments with a globally recognized financial brand. Combined with legal clarity and the possibility of an ETF, this move could push XRP further into mainstream finance than ever before.
@ Newshounds News™
Source: Coinpedia
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