Crypto and Know Your Customer (KYC) guidelines seem to be an unhappy marriage — pseudonymity in the digital currencies’ DNA doesn’t match the old-school centralized protocols of traditional finance, but cohabitation is inevitable for the maturing industry.
The tension never really goes away, but even before recent months’ market failures for crypto, the regulators have been clearly hogging the blanket, nudging the established platforms toward more strict authentication procedures and cutting the privacy-hardline players off the market.
Cardano co-founder Charles Hoskinson expressed a popular opinion from the industry side in the United States Congress when he told legislators that no regulators are doing a good job with KYC and Anti-Money Laundering (AML) safeguards at the moment. But, will the crypto community reach the point both technically and reputationally when it would get an opportunity for a more decentralized and more private KYC system?
From passport snaps to third-party databases
It is hard to imagine today, but KYC — while a standard for the traditional financial system for a few decades — has only recently become a default feature for the largest players in crypto.
For example, Binance announced a more strict identification procedure for users only in 2021 after a series of legal controversies across the globe. Needless to say, there is still a myriad of smaller exchanges that are managing to evade the regulators’ attention and disregard the global call for tighter KYC.
But, things will hardly go as smoothly for those who prefer to exploit the grey zone, and it is not the overreaching officials and enforcers alone who threaten the existence of this segment.
The pressure is rising from individual and institutional newcomers alike. The former, while not necessarily being familiar with the ideological heritage of crypto, is ready to trade sovereignty for convenience on an established platform. The latter are hesitant to risk their funds by putting them in an underregulated market. Justin Newton, founder and CEO of Netki — a crypto-focused KYC company — explained to Cointelegraph:
“As crypto becomes mass market, it is likely that the vast majority of users will choose to use services that have at least some points of centralization. In the real world, most people value privacy and civil liberties, without being ultra libertarians. When given the choice between a reasonably regulated platform and potentially shady and…
Click Here to Read the Full Original Article at Cointelegraph.com News…
