Smarter Rules for a Safer Web3

The IOTA Foundation has submitted its formal response to Australia’s proposed AML/CTF regulatory reform, supporting a modernized framework that both safeguards the financial system and fosters responsible blockchain innovation. The Foundation promotes risk-based flexibility, lighter compliance for low-risk actors, and support for decentralized Web3 models.

Key Ideas

Flexible, proportional compliance fosters inclusion and innovation: IOTA advocates for smarter customer due diligence (CDD) that delays or simplifies checks for low-risk scenarios, recognizes the burden on small Virtual Asset Service Providers (VASPs), and tailors expectations for DAOs and non-custodial wallets using tools like decentralized identity.
Infrastructure-wide reforms should be global, interoperable, and practical: From aligning reporting cycles with local practices to harmonizing Travel Rule protocols, IOTA pushes for scalable solutions like shared compliance hubs and interoperable standards that balance enforcement with developer usability in Web3.