We No Longer Need Centralized Exchanges — ZKP2P Changes Everything

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For years, centralized exchanges have been treated as a necessary evil. If you wanted to move value between fiat and crypto, you had no real choice: create an account, go through KYC, trust a third party, and accept custody and censorship risks.

That assumption is now fundamentally broken.

With the emergence of ZKP2P
:backhand_index_pointing_right: The ZKP2P Protocol | ZKP2P Docs

we now have a protocol-level way to transfer fiat value directly from a bank account to another person, peer-to-peer, without an intermediary, without platform registration, and without handing control to a centralized exchange.

This is not a new exchange.
This is not a new broker.
This is a new primitive.

From trusting institutions → to proving actions

ZKP2P does not require trusting a third party to “do the right thing.”
Instead, it allows participants to cryptographically prove that an action occurred, while preserving privacy. You can prove that a payment was made, or that agreed conditions were satisfied, without exposing unnecessary personal or financial data.

This is a major shift:

  • No custodial risk
  • No centralized order books
  • No single point of failure
  • No mandatory accounts or platform lock-in

Just peer-to-peer coordination backed by cryptographic proofs.

A moment similar to Uniswap — before everyone noticed

This feels very familiar.

About five years ago, I wrote on this forum about a then-new technology called Uniswap. At the time, it looked experimental, niche, and easy to dismiss. Today, AMMs are foundational infrastructure used by millions.

Here is that post for reference:
:backhand_index_pointing_right: PDC listed on UniSwap / 1inch.exchange! - #2 by Dimitar

Back then, Uniswap removed the need for centralized crypto exchanges by replacing trust with code.

ZKP2P does something equally important on the fiat side.

Why this matters

Centralized exchanges didn’t become dominant because they were ideal — they became dominant because there was no alternative.

Now there is.

ZKP2P represents a magical step forward, on the same order of magnitude as Uniswap:

  • removing intermediaries
  • minimizing trust
  • enabling direct, permissionless interaction
  • and redefining how value can move between people

We are witnessing the early days of a shift away from platform-mediated finance toward protocol-mediated coordination.

Most people won’t notice at first.
That’s exactly how it starts.

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By the way, this is not theoretical, the protocol is in BETA but it works - I transferred euros from my Revolut account to a stranger online and received USDC without using an intermediary, without a KYC, without registration anywhere. :happyant:

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Very cool. :smiling_face_with_sunglasses:

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This is really awesome in many ways. However, if I understand it correctly, it doesn’t seem to solve the practical issue of KYC and legal risk (yet?).

This technology appears to place all the legal risk of NOT having any KYC involved, such as being accused of money laundering, onto the two human parties involved, and I am not sure if the parties can deny sending or receiving fiat to or from another person, because the transaction will appear on two bank statement. That’s one of the difficulties with electronic on/off-ramp - fiat transacted electronically is always clearly linked to the responsible/liable individuals or organizations involved.

Maybe I would rather like to be able to prove that I just transacted with a friend of a friend of a friend, and at least know the name of the first friend in this chain. Or maybe I would rather just use that KYC’d on/off-ramp ramp after all to avoid any potential trouble. (Actually I have no idea what I would need to check to transact legally with a stranger.)

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No. The law does NOT require you to ask the other person where their money comes from, nor does it require them to ask you where your money comes from when you do a P2P crypto transaction.
The legal obligations fall on banks and financial institutions (e.g. Revolut), not on private individuals.

EDIT:

If you have concerns, work only with USDC, which is regulated and all accounts with dirty money are blocked and cannot make transactions, i.e. there is no chance of them pushing dirty money on you.

https://cryptonews.com/exclusives/tether-freezes-3-3b-in-tokens-as-new-data-shows-30x-gap-with-usdc/

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Is that the Law in Europe, or is that the case globally?

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Important clarification - I’m talking about Europe. :dragon:

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The feeling is that the banks in Europe will block this service as they are responsible to follow money laundring laws and such. Currently for example banks in Sweden might freeze or close accounts just for making transactions with crypto related exchanges and stuff, might change with the new MICA rules.

in the developed countries you won’t get away with no KYC, it will never be allowed. All FIAT money will be traced except for criminals and others which seem to be able to always move large funds of money somehow without questions.

But in the non-developed and with the open criminal parts of the world then this might work. It seems like a great idea though.

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Excuse any ignorance here on my part. But isn’t it the bank that does the KYC on their customer and thus you should be able to assume that sending or receiving money form a bank account regulated by the bank should not need you to know the other person (peer) who is NOT your customer, but some one you want to send money to. KnowYourCustomer

Of course if its over some limit then other regulations might kick in. But if I buy a second hand item (lounge, TV, Computer, or whatever) then why should I do any sort of KYC on the person before transferring money to them. They are not my customer nor am “I” to them. I am not a business and they are not. Just two people

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Extremely unlikely - Revolut has not blocked accounts with which people have been trading on UniSwap for 5+ years, and zkp2p is no different in this respect from UniSwap, in the both cases you don’t know who is on the other side of the trade…

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Revolut allowing for large transactions? Because there are other statements on reddit, even if it is difficult to know which type of people that are complaining and what they might have done or not.

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I’m not saying that Revolut won’t do checks for large amounts, I’m saying that if you have nothing to hide you will pass the check.

Maybe it’s not clear, so let me explain, the zkp2p protocol removes the intermediary crypto exchange where you perform KYC. It is assumed that all banks have already performed KYC on their clients, this protocol does not remove banks as intermediaries and I don’t think this will ever happen in the fiat system.

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Remember the days when folks were paid in cash and could give it to anyone they liked? They didn’t even need to put it in a bank at all! :sweat_smile:

How ever did we cope without intrusive KYC?

It feels like the modern equivalent would be to be paid in crypto (stable coin or otherwise) and just never go near the banks.

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$27.28 for a 38 hour week was my first full time job. Well after tax that was

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Were you building the pyramids :joy:

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Holiday work before Uni. So fairly young then and over 3 months got me some spending money for the year.

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I would be careful about this. If you transact (to or from) a bank account with any service that the bank (not even government) regards as suspect you will likely have your account frozen.

In UK people have been stuck unable to access their money or pay bills for months due to a bank being overly cautious.

So when using services like this it would be wise to make sure you can cope with a lengthy and bureaucratic process to regain access to your account. Ideally have a special account for it and don’t leave cash in it that you can’t manage without!

Having said that it is good to have more options that provide alternatives to banks and other centralised services.

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I wonder if this is not a circumvention of KYC, but rather an anonymised and automated exchange of fiat funds for crypto funds using an escrow account, because if you sent someone fiat euros, that person would also receive those euros in their bank account in exchange for the USDC sent to your wallet, which would mean that in this case, two licensed entities (the banks of the two parties to the transaction) would fulfil the KYC requirements.

However, if this is not the case, we have a very interesting situation. According to the requirements of the MiCA Directive, the second main group of entities covered by the regulation are Crypto-Asset Service Providers (CASPs). These include:

  • crypto-asset exchanges – platforms enabling the exchange of crypto-assets for cash or other crypto-assets,
  • crypto-asset trading platforms – multilateral trading facilities for crypto-assets,
  • cryptocurrency wallets – entities providing crypto-asset storage and administration services,
  • investment advisers – entities providing advice on crypto assets (not only to clients of crypto asset services, but broadly),
  • order execution entities – entities executing transactions on behalf of clients.

All these entities must obtain the relevant authorisations and meet the organisational, capital and operational requirements set out in the regulation, and the implementation of the MiCA requirements involves, among other things, adapting the KYC/AML procedure in line with FATF standards.

So, if you managed to send euros to a stranger and receive USDC in return, we have two options:

  • the creator of zkp2p may be considered a service provider here and may be subject to MiCA regulatory requirements,
  • perhaps this means that there is a gap in MiCA regulation that does not take into account the technological specificity of DEX..?
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With zkp2p, there is no crypto intermediary.
The bank (e.g. Revolut) remains an intermediary only on the fiat side — the euro transfer — where both parties have already passed KYC/CSC. That part is off-chain and completely standard.

On the crypto side (USDC), there is no company, no platform operator, and no custodian:

  • there is a smart contract,

  • the seller locks the tokens themselves,

  • the buyer cryptographically proves the euro transfer,

  • the contract automatically releases the tokens.

That is pure decentralized code.

This is exactly where the PulseChain / Richard Heart case matters.
The SEC attempted to regulate and sue a decentralized blockchain (a fork of Ethereum), and smart-contract–based systems similar in nature to Uniswap.

The case was dismissed in full. The court effectively accepted that:

  • publishing and using decentralized, open-source code is not a regulated financial activity by itself,

  • a regulator cannot simply “sue software” when there is no central operator, control, or intermediary.

In other words:

Regulators can regulate banks and centralized exchanges, but they have failed when trying to regulate autonomous smart contracts.

So far:

there are no known cases of a European regulator regulating decentralized code itself, there is a US case where this was attempted — and it failed.

That’s why zkp2p does not remove compliance:

  • it removes the crypto exchange as an intermediary,

  • it keeps the bank exactly where the law already places it, and it relies on decentralized code, which courts have treated as software, not a financial institution.

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That’s what I was wondering about, whether the EU regulator will try to regulate autonomous software, in other words, automatons :slight_smile:

Apropos, SEC Chair Paul Atkins says blockchain tech could turn into the most powerful financial surveillance system ever if regulators demand universal transaction monitoring, potentially eroding user privacy. But he believes there is a way to regulate crypto that stops crime without stripping away people’s privacy. He proposed a balanced regulatory framework targeting on-ramps and off-ramps for anti-crime measures, while preserving core blockchain privacy through innovations like zero-knowledge proofs.

We should take advantage of the fact that Trump has changed his mind about crypto and that SEC regulations now favour projects such as Autonomi.

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