The crypto community is divided on a new hook for Uniswap V4 that is listed in an open-source directory. Before users can trade on a pool, the hook enables Know Your Customer (KYC) checks to be performed on them. The probability of decentralised banking protocols getting whitelisted by authorities, according to critics, is increased by the hook.
With the aid of a hook, programmers can modify a piece of code without changing the program’s overall structure. This hook will let programmers use KYC verification within the decentralised financial protocol in Uniswap V4. KYC procedures are used by financial institutions to verify customer identities and evaluate related risks. Detecting money laundering and terrorist funding operations is one of KYC’s main objectives.
A community developer introduced the KYC hook as an opt-in feature to the Uniswap V4 directory. A nonfungible token (NFT) performs the KYC verification. The hook, according to some users, is particular to liquidity providers and may be helpful for projects that need to adhere to regulatory standards in specific regions.
DeFi protocols and transactions are being examined more closely by governments all around the world. The International Monetary Fund (IMF) and the Financial Stability Board (FSB) have recommended a crypto regulatory roadmap that the G20 agreed to adopt. Early 2024 is the anticipated release date for Uniswap V4, which adds customisable hooks and restricts access to entities with governance approval.