The cryptocurrency industry operates largely without oversight by regulators such as global financial regulators. Unfortunately, some in the cryptocurrency space believe that regulated and cryptocurrencies are the exact opposite, they are exempt from regulators.
As one Redditor said:
“The goal of cryptocurrency is to stay away from banks. These banks keep your money in a safe that no one can find. Bank cryptocurrency is similar to having another bank account. KYC by ShuftiPro [know your customers] why do people need to know Where does the money come from?
Banks and countries are trying to control you again, applying the law, you need to provide data when paying fees. Why? So they control you. We still need to pay taxes when we buy things, so why do they want to know who paid the money.
Understand the importance of KYC for Blockchain
Although Blockchain enthusiasts find this inappropriate, knowing that your client program is necessary to determine your identity before they can access products and/or services related to bitcoin. With these procedures, money laundering, terrorist financing and other illegal activities can be prevented.
Although some might think that these programs violate the nature of the virtual currency, they are very important. For example, exchanging a cryptocurrency that processes mandatory deposits should establish a working relationship with the bank. As a result, banks have adopted anti-money laundering rules that allow you to “know the customer”.
In order for banks not to freeze their funds, Bitcoin exchanges should conduct a “know your client” check for each client. For cryptocurrency exchanges that bypass the client verification process, it may not process mandatory deposits. However, this will have a negative impact on the adoption of cryptocurrencies.
In order to somehow get the process off the ground, many states decided to copy everything that can be copied from the traditional financial sector, deciding that it is better than nothing (and it is!).
Anti Money Laundering (AML) rules and the requirements to Know Your Customer (KYC) also came to the cryptocurrency industry from the traditional financial market.
In many countries of the world, including the USA, European countries, Japan and South Korea, KYC / AML has long been the basis for regulating the activities of financial companies.
In addition, these requirements are unified internationally. And the introduction of these practices means that cryptocurrencies and their weight in the global financial market are finally beginning to recognise.
Make Your Client Trust on your Crypto Exchange
Unfortunately, the client verification process works in one way: only the company verifies the client, but the client cannot verify the company. The company verification process will provide investors with the opportunity to verify team membership.
The US Securities and Exchange Commission [SEC] is one of the few legal ways for investors to understand the team members behind a Blockchain project before investing.
Unfortunately, the US Securities and Exchange Commission is working in the United States to develop blockchain positions that are considered securities products. Using proven cryptocurrencies, teams can fulfil their obligations.
If there is no way to test the team behind the blockchain project, investors will lose their money for fraud over time. According to a study conducted by the consulting company ICO Statis Group, more than 80% of the initial tokens launched in 2017 were a fraud.
Some of the largest bitcoin frauds in history include OneCoin, BitConnect, PlexCoin, Entrance, and PinCoin & Ifan. These scammers received approximately $ 30 million, $ 700,000, $ 15 million, $ 32 million, and $ 660 million, respectively.
However, if investors have a way to check the members of the project team, then a lot of them can be stolen, and the number of investors will be much less.
Nonetheless,
“If they want to remain anonymous, it doesn’t matter, but they should not ask for upfront funding and KYC in exchange for code that has not yet been written.”
I don't like KYC.