Galaxy Digital is building a KYC/AML framework designed to help institutions actually use DeFi without running afoul of regulators.
Here’s the thing about DeFi: it was built to be permissionless. Anyone with a wallet can swap tokens, provide liquidity, or take out a loan. But for a pension fund or a bank, “anyone can use it” is less a feature and more a compliance nightmare.
The institutional DeFi paradox
Galaxy has identified compliance challenges as a primary barrier preventing institutions from participating in decentralized protocols.
Traditional finance operates on a “know your customer” basis. Every counterparty gets vetted. Every transaction gets monitored. Suspicious activity gets flagged and reported. DeFi, by design, does none of that.
