Is it fair for Crypto to become regulated?
Is it fair for Crypto to become regulated?
KYC (Know-Your-Customer) is an administrative procedure in the financial sector that involves establishing the identity of a customer in order to carry out legitimate transactions and prevent any illegal activities.
Cryptocurrency regulation is an inherently complex and challenging topic because it lies at the intersection of copyright, licensing, financial law, tax accounting, and cryptographic algorithms. In a legislative framework, this is a very complex subject requiring a great deal of expertise and knowledge.
A significant aspect of cryptocurrency is the fact that many blockchain algorithms are designed specifically to protect anonymity. However, all administrative procedures involving public institutions require the identification of all parties involved. This requirement applies both to contracts between individuals, companies making financial transfers within or outside the country (cross-border transactions).
A KYC procedure’s regulatory framework depends on the country and the organization involved. For example, FinCEN regulates this process in the US; in Europe, it is the European Parliament.
As a general rule, the KYC process consists of three stages:
- Client identification (identification of name, date of birth, and, if a corporate client, company name, registration documents, etc.)
- Due diligence on each customer
- AML — detecting unusual transactions within an account.
Cryptocurrency industry attitudes toward KYC procedures have not always been clear-cut. The market originated as a collective initiative of individuals with elements of anarchy. The initial Crypto Anarchy Manifesto was published by Tim May — Intel employee — in 1988. Over time, cryptocurrencies have evolved to the point where national governments could no longer ignore them, and regulation has become inevitable. The market has matured as well. One of the most striking changes in the industry was the introduction of all users’ identification by Binance, the largest cryptocurrency exchange. In the past, it was only required for users with a monthly turnover of more than 100 BTC. Moreover, quite a few services offer on-chain remittance analytics to detect money laundering or terrorist activities, such as Chainalysis or Elliptic.
C100 index policy on KYC procedures.
KYC is necessary for any C100 token purchase. The main purpose is to prevent criminally derived funds from participating in index coins purchases. Also, citizens of sanctioned countries, such as Iran, North Korea or the Syrian Republic are not allowed to make initial purchases on the website. In addition, due to the lack of established tax regulations, users of the United States and some other countries are restricted for now.
