There are always changes occurring within the cryptocurrency industry. Generally, we hear about the technological developments that help to innovate and push the market forward in adoption and value. However, there has been significant attention paid lately towards the developments in the regulatory space as well, notably in terms of where cryptocurrency companies are offering their services and how customers are being identified through KYC (Know-Your-Customer) policies when they use them. Both are important considerations to explore and understand as the industry matures and such practices become more commonplace.
Over the past several weeks, several cryptocurrency companies, including CoinPayments, have been publishing lists of countries that will be blocked from using their services. Many of these countries are unstable regimes or dictatorships, either in wars or have been placed under sanctions by leading economies (such as the case of the USA putting sanctions on Iran) due to political reasons. Some of the countries that have been put on the list are there for their own political reasons, too, such as India banning cryptocurrencies at the national level.
To remain in line with other leading economies, and to help legitimize the business of cryptocurrency firms, these sanctioned countries are being excluded from using services. This is a step in the industry being recognized by mainstream marketplaces as low risk enough to do business with and help speed along adoption.
Much like how banks and other financial institutions operate, KYC, otherwise referred to as ‘Know-Your-Customer’, is a policy enacted to safeguard against AML/ATF (Anti-Money Laundering/Anti-Terrorist Financing) operations through their businesses. It has the added benefit of allowing buyers and sellers to identify one another and enable accountability between two dealing parties in an ecosystem. This is especially important in an online marketplace where identities can be easily concealed and fraud or failure to deliver is easy to execute.
As the cryptocurrency space matures, companies will begin to enable their own KYC. CoinPayments has already begun this process to better serve our merchants and users and make the platform more trustworthy and encourage greater adoption of its technology. If the space is to garner more interest and investment from mainstream markets, there needs to be KYC put in place to ensure that individuals who are involved are safeguarded as much as possible against bad actors. Although this goes against the original idea of cryptocurrency, it is a much-needed step in becoming an industry that can appeal to as many people globally as possible and protect your individual stake in it as well.
To facilitate the growth of the cryptocurrency industry, measures that align it with the global markets regarding accepted standards and practices will have to be put into place. This includes adhering to which markets shouldn’t be dealt with and how companies should identify their users through KYC. It will benefit the crypto space in the long run, despite the departure from long held principles of how and why cryptocurrency should be used and governed.
