1inch Blocks US Trades in Anticipation of Separate Prospective Platform

1inch geofenced its interface from America based users as it prepares itself to launch 1inch Pro, a product designed for the US market

Regulating the DeFi Space

1inch is the latest platform to block access to its American users but promises a regulated and compliant product currently in development. Beginning September 29, the Decentralized Exchange (DEX) aggregator will not allow access to its interface for Internet Protocol (IP) addresses from America. 

A representative from 1inch confirmed, in a report by The Block, that a sizable portion of the funds raised in its Series B funding rounds will be used to develop a product designed for the US Market.   

“Our Interface is NOT offered to persons or entities who reside in, are citizens of, are incorporated in, or have a registered office in the United States of America or any restricted territory, as defined below (any such person or entity, a ‘Restricted Person’),” reads the terms of service. “We do not make exceptions.” 

1inch’s terms of use have specifically singled out the restriction of access for US-based entities. Although the restriction has been incorporated into the platform’s term of use since April, the restriction only took place recently on a technical level. With the restriction in effect, many will wonder if the actions were precautionary.

‍

Circumventing the Restriction

The concept of a decentralized platform has always been closely associated with the idea of a permissionless and censorship-resistant protocol. The recent decision by the 1inch team to block access to the 1inch interface has been criticized.  

1inch does not implement Know-Your-Customer (KYC) protocols, unlike other centralized platforms. The only thing that is needed to interact with the interface is a wallet address. Strict conditions have been imposed on international centralized exchanges (CEX) from onboarding America-based users, but it becomes more challenging to geofence against a wallet address with no identity attached.

Centralized exchanges impose strict KYC protocols to identify the jurisdiction of the account holder. Adamant users will attempt to circumvent the restriction by using Virtual Private Network (VPN) to hide the original IP address. 1inch Network’s term of use prohibits such conduct. 

‍

DeFi Crackdown

1inch’s approach could be considered a precautionary step to prepare for incoming regulation in the United States. As the fiscal year closes, authorities in the US are eyeing a policy change.‍

Gary Gensler, the chair of the US Securities and Exchange Commission (SEC), called Decentralized Finance (DeFi) a misnomer during an interview with Wall Street Journal in August. There are centralized features that make the entities offering securities answerable to the SEC, and these entities will be a primary focus to the regulators.

Taking into consideration that regulation appears incoming, 1inch has taken steps to self-regulate. It is the most sensible position to take, judging from the level of scrutiny that regulators are starting to impose on centralized exchanges.

The crypto community is not incompatible with regulations. Regulations can be forward-looking and can provide a conducive environment for growth. The only complaint is the speed of introducing legislation that clearly identifies the various stakeholders’ roles and responsibilities within the ecosystem. Until this is sorted out, many players are adopting the wait-and-see approach.  

‍

What is 1inch?

1inch is a decentralized exchange (DEX) aggregator that provides the best rates by discovering the most efficient swapping routes across all leading DEXes. 1inch operates on multiple networks, including Ethereum, Binance Smart Chain, Polygon and Optimistic Ethereum. 

For more information about 1Inch, see the following official links:‍‍

Website | Twitter | Medium | GitHub

Source : bsc.news