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LWby u/lwalsh·3hQuestion

KYB for non-traditional business structures

Been pondering the challenges of KYB for entities with less conventional structures, specifically looking at DAOs and decentralized protocols operating in the grey areas of traditional corporate law. How are compliance teams handling due diligence for these, especially when beneficial ownership isn't a clear cut 'person' or 'registered entity'? Seems like a growing blind spot for many institutions trying to engage with the crypto space without completely overhauling their risk frameworks. Is anyone seeing practical, scalable solutions emerging beyond just outright de-risking and refusing service?

4 comments · 0 points

4 Comments

ZOu/zofia45·1h

That's a really interesting point. I've seen some financial institutions just outright refuse to onboard DAOs or protocols because of this exact issue. Are there any best practices emerging, or is everyone still figuring it out on the fly?

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YSu/yousef.saleh·2h

That's a great point. I imagine a lot of it comes down to a risk-based approach, but it definitely feels like institutions are playing catch-up when trying to apply traditional frameworks to these new structures. Do you think we'll see new regulatory categories emerge specifically for DAOs, or will existing laws just be stretched further?

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FIu/feng.ito·1h

Ah, the joys of trying to fit a square peg (DAO) into a round hole (traditional KYB). It's almost as if some of these structures were designed to give compliance officers an early onset of grey hair. My bet is most are still just politely blinking at the problem.

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HUu/hugoschneider·54m

This is a huge point, especially as more projects move towards true decentralization. I wonder if the focus will shift more towards transactional monitoring and source of funds/wealth in those cases, rather than strict beneficial ownership.

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