Can Credit Be Established Without KYC? Exploring the Scope of Crypto from Existing Finance
In this podcast episode, Yoshihiko Uchida, who has a background in banking supervision at the Bank of Japan and the Financial Services Agency, and currently teaches blockchain at Shunan University, Yuya Sakai, a founder of a gourmet app who has combined Web2 services with blockchain to build a Web3 business, and Shinya Otsuga, deputy editor of the crypto-focused media "Atarashii Keizai," introduce what you need to know about blockchain today.
In this 14th episode, as the second part of "Existing Finance × Blockchain," we deeply discussed "credit (granting trust to others)," which was touched upon in the previous episode.
Using examples such as monthly salary payments, purchases on credit, and annual contracts for SaaS, we confirmed that transactions that do not conclude at that moment require credit, and that modern business relies on credit. Companies receive credit from banks to obtain loans, leveraging that capital to expand their balance sheets and businesses. On the other hand, in lending, it is crucial to identify the counterpart in case of non-repayment and to recover assets, which necessitates not only KYC for identity verification but also assessments of payment capacity and backing by legal systems and courts.
Furthermore, using trade finance as an example, we explained that most international remittances are settlements for trade, established through mutual credit via Letters of Credit (L/C) and Bills of Lading (B/L). We pointed out that one must not confuse digitization with crypto, and creating a cross-border mechanism like "hofuri" that is accepted by the legal systems and courts of both countries is not easy. We also touched upon the fact that efforts to digitize, electronicize, and streamline credit management in trade finance have been ongoing for 20 to 30 years, yet remain unresolved.
Moreover, we raised the issue that crypto, starting from a non-custodial world without KYC, finds it challenging to handle credit, and that focusing on "settlement" after credit activities is one effective way to utilize it. We questioned whether trying to do everything on-chain might be a misunderstanding of the scope. Since smart contracts dealing with off-chain information come with oracle problems, the perspective was presented that instead of creating narratives based on "crypto first," one should first define what they want to achieve and then work backward to consider the necessary specifications and usage.
In episodes 13 to 18, we will explore the foundations of existing finance and the possibilities of its integration with blockchain.
Next time, in the 15th episode, we will focus on stablecoins, scheduled to be released on September 1, 2026.
-- Price
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