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Navigating DeFi as an Institutional Investor

DeFi has exploded in popularity, offering a wide array of financial products and services built on blockchain. But as an institutional investor, you've got responsibilities – and regulators breathing down your neck. So how do you dip your toes into the DeFi pool without drowning in red tape? Here at Blue, our main goal is to help institutions navigate DeFi while maintaining regulatory compliance.
Institutional investors require a secure and compliant way to access the DeFi market. Institutions need a solution that allows them to access DeFi’s biggest markets while still adhering to regulations. Institutional investors have to follow Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations to keep the regulators at bay. This means they can't just trade any DeFi protocol with anonymous wallets. They need a secure and compliant way to access this markets built on blockchains. Enter Safe Tokens.
Safe Tokens are ERC20 wrapper tokens that come with built-in Know Your Customer (KYC) and Anti-Money Laundering (AML) checks. By wrapping any ERC20 token into a Safe Token, only KYC-verified wallets can execute trades, ensuring a higher level of security and compliance. Safe Tokens are designed to be compatible with almost all DeFi protocols, which enables the formation of permissioned pools on platforms like Uniswap and Curve. As a result, Safe Tokens play a crucial role in fostering secure and compliant transactions within the decentralized finance ecosystem.
To facilitate permissioned transactions, Safe Tokens rely on on-chain credentials, which are attestations of user attributes such as KYC and AML compliance. Stored on the blockchain and accessible via users' wallets, these credentials are managed through BlueID, a credential aggregation solution that streamlines the process and eliminates the need for repetitive KYC onboarding. When a wallet initiates a Safe Token transaction, their BlueID is checked for the necessary credentials at the smart contract level. If a wallet’s BlueID lacks the required credentials, the transaction will fail, ensuring a secure and compliant environment for all parties involved.
One of the key innovations of Safe Tokens is their ability to enforce KYC/AML compliance without breaking ERC20 compatibility. As a result, Safe Tokens can leverage permissionless primitives to build permissioned DeFi solutions, ultimately alleviating protocols and chains from the burden of integrating KYC/AML. This composability fosters a standardized approach to compliance across protocols and chains, keeping the core infrastructure of blockchain technology permissionless while ensuring a secure and regulated environment for institutions.
With Safe Tokens, you can navigate the DeFi landscape with confidence, knowing you're staying on top of compliance while enjoying all the perks the exciting DeFi ecosystem has to offer.