When it comes to the cryptomarket, KYC is one of the most hotly debated topics, otherwise known as Know Your Customer. The number of ICOs that are legally required to undertake KYC procedures on a daily basis is growing exponentially. Due to this, it is extremely important to have a clear understanding of the why, how, and what for is KYC in the world of crypto.
For those that don’t know, KYC is the process of verifying the identity of each and every client or customer. Every backer is supposed to go through the KYC procedure as well as to pass it before they can continue. This is a legal and regulatory requirement in many jurisdictions and helps ICO projects know that they are doing business with a legitimate entity.
Standard KYC procedures
Standard KYC checks require a scanned copy of the passport as well as requiring to make a “selfie” while holding the document to avoid issues of fake identity. In addition to this, proof of address is also often requested in the form of utility bills or bank statements. KYC is governed by AML regulations which stands for Anti Money Laundering, but AML can be a lot more in-depth.
If for example, and ICO project has a strong KYC procedure during the token generating event, it is a good sign of legitimacy for banks and it also means that the project is unlikely to encounter difficulties working with other financial institutions.
Drastically varying regulations
When we speak globally, KYC and AML regulations vary drastically depending on the jurisdiction.
Citizens of some countries such as India and China are not allowed to take part in ICOs, and then, of course, the US has its own set of peculiarities.
The main purpose of KYC is to verify an individual’s identity, something that is diametrically opposed to one of the key selling point of the sector – anonymity. But whilst this is something of a paradox, it does ensure the transparency of transactions and this is something that we cannot forget the importance of.
These are the main advantages of implementing KYC with your ICO:
- Stopping scammers from maliciously taking part in ICOs
- Stopping criminal acts such as money laundering
- Keeping investors assets safe
- Circumnavigating fiscal, legal, and reputational issues
- Building credibility with banks
When it comes to AML, ensuring your KYC is up to speed is critical. By doing so, not only are you compliant with international regulations, but you are minimizing the number of critical acts whilst guaranteeing the safety of your token sale. In other words, it is a way of protecting ICO projects and those that back them whilst ensuring the utmost in transparency.
KYC can be undertaken at these different stages:
- Before tokens are purchased
- Before registration
- Before the output of tokens
E&S Group takes matters of AML and KYC very seriously and ensuring the safety of its clients is paramount. Our team of legal and corporate professionals can assist with all matters in AML and KYC, ensuring you are compliant with the set legislation, to set up procedures for you to retain your integrity. Being up to speed on the requirements and knowing when to undertake different levels of KYC requires expert guidance. You can contact us here or by sending an email on firstname.lastname@example.org.