Cryptocurrencies and the bitcoin industry were mostly unfamiliar with the KYC practices in their early years. Their users would normally carry out the transactions without even having the identities revealed, let alone identified. In some instances, the users would even proceed without creating the accounts.
However now, the cryptocurrencies and the crypto-financial services are now being persuaded in this matter. The global regulatory regimes and concerned authorities have started to persuade the cryptocurrency industries in following and adhering to the KYC rules.
Although initially, the crypto exchanges and their customers had expressed their displeasure with the decision, the authorities, however, are firm on implementing and making the KYC rules followed.
Cryptocurrency has a reputation for being an anarchist financial tool in the financial institutions and the market. The reasoning being the shortcomings in its business operations’ security, which often leads to crimes such as money laundering and several types of online crimes.
With all the efforts that have been done in curbing the vulnerabilities in the cryptocurrency industry, roughly two-thirds of the crypto exchanges have not officially accepted the terms of the KYC Compliance.
The cryptocurrencies, which are working without being compliant and adhere to the KYC rules, not only pose risk to their own selves but for all the stakeholders involved. Also, they most likely are and have to work under unclear jurisdictions. This does nothing good to them except for saving them from the lawsuits. Besides this, the interests are not safeguarded; neither of the entities or any individuals or some other involved entities. Consequently, the money that will flow under the very nose of crypto industries will be illicit.
With all that has been said, it presents a quite clear picture of why the crypto industries should be implementing the KYC in their business operations. Implementing it won’t just have them protected, but other stakeholders involved as well.
Future of online KYC verification in Cryptocurrency
The crypto world is currently experiencing Regtech 3.0. It is a technology that helps in making the compliance-related processes digitized and, therefore makes them easier to perform. The RegTech technology also helps in minimizing the costs, enhanced consumer protection, and identification of the risks before they incur and the regulatory authorities intervene.
The technologies which it entails include artificial intelligence, machine learning, RPA (The robotic automation of technological processes and production), and biometrics.
The concept of self-governance is yet another concept that is being explored by blockchain researchers. It tends to empower identity verification methods.
With that said, for now, the contemporary technologies, which the blockchain technologies can find most helpful are: machine learning and the biometrics technologies. These two technologies among other present-day technologies can be used the most for enhancing online security and verifying the identity of the customers in the crypto industry.
Nevertheless, opting for technology for the KYC Crypto industry should be after some considerations. A technology, which is customer friendly and at the same time robustly secured, should be preferred.
Last, not the least, by using artificial intelligence for the sake of real-time verifications and prompt KYC Solutions to practice the procedure, the crypto industry can have what it needs.
KYC Document Verification for Crypto Industry
The Crypto industry, for having the identity authentications, can also make the use of the documents. However, it is important to mention that the documents should be one of the government-issued documents. By cross-matching the pictures on the documents, with the realtime biometrics, crypto industries can have their customers verified. Moreover, customer data can also be checked against various international AML sources.