US Treasury’s DeFi ID Plan Draws Privacy Backlash

The US Treasury is exploring whether identity checks should be built directly into decentralized finance (DeFi) smart contracts, a move critics warn could rewrite the very foundations of permissionless finance.

Last week, the agency opened a consultation under the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), which was signed into law in July. The Act directs the Treasury to evaluate new compliance tools to fight illicit finance in crypto markets.

One idea was embedding identity credentials directly into smart…