The option of using crypto to make online payments has proved extremely useful for businesses and their customers alike. Fast, secure transactions over the blockchain have transformed how we handle money, but how does the Know Your Customer (KYC) process fit in?
Why do KYC policies exist?
KYC processes are included in many industries, as a necessary part of customer protection and Anti Money Laundering (AML) regulations. While these digital tokens are designed to be freely exchanged without intermediaries, there has to be a degree of control that lets virtual asset service providers (VASPs) know who they’re dealing with.
The exact regulations vary by country. In the US, crypto exchanges are classed as money service businesses (MSBs) according to federal regulations, meaning that KYC is necessary for anyone using them.
As more crypto coins are added to the list of tokens we can use, this market is growing in importance. Rapid rates of growth explain why it has attracted more attention from regulators and financial authorities who want to ensure that the right controls are in place to avoid these tokens being used for non-approved purposes. This look at the approach taken in Switzerland suggests it could lead to a combined Europe-wide KYC process in the future.
How are they carried out?
The KYC process varies according to the specific regulations in the country where you live. The basic idea is that the business needs to gather enough information to know who you are. This typically means that you have to provide your name, date of birth, and full home address. Until this information is provided, the account may be restricted in terms of the operations that can be carried out or the amounts that can be transferred.
You might be asked to provide a document that confirms these details, such as a national ID card or driving license. Some businesses may ask you to take a photo or video where your face can be compared with the document you’ve provided. The full process should only take a moment, after which the account will be marked as KYC verified and any restrictions lifted.
How shared customer data is secured
The main concern for crypto customers is how their data is going to be used and how it’s protected. All customer data needs to be handled securely by those platforms that follow KYC procedures. By integrating a crypto payment gateway, advanced encryption and authentication tools are employed to ensure that all transactions are carried out securely and reliably. By following the latest privacy rules and regulations and keeping sensitive information confidential, they also avoid any privacy concerns.
The KYC process is designed to boost the security and reputation of the crypto industry, so it isn’t something to be afraid of or mistrust. By taking a moment to provide the requested information, you can make sure that you comply with the latest regulations and can start using crypto services safely.
