Odaily Planet Daily News: The U.S. Ministry of Finance is soliciting public feedback on how to use digital identity tools and other emerging technologies to combat illicit financing in the cryptocurrency market. One of the options is to embed identity verification into DeFi smart contracts. According to the Ministry of Finance, digital identity solutions (which may include government ID cards, biometrics, or portable credentials) can reduce compliance costs while strengthening privacy protections. They can also make it easier for financial institutions and DeFi services to detect money laundering, terrorist financing, or sanctions evasion before transactions occur. One idea proposed in the draft for public comment is that DeFi protocols can integrate digital identity credentials directly into their code. In this model, smart contracts can automatically verify users' credentials before executing transactions, effectively building KYC and anti-money laundering (AML) safeguards into the blockchain infrastructure. The consultation report released this week stems from the newly enacted GENIUS Act, which was signed into law in July. (Cointelegraph)