The KYC / AML (Know Your Customer / Anti-Money Laundering) policies are legal measures taken by companies that develop ICO projects to confirm the identity of the buyers of the tokens in order to ensure that the money that is being invested does not come from any illegal activity and that the person is not legally precluded to invest.
Owing to the pressure exerted by the authorities on the cryptocurrency market, the major Exchange Houses and the new ICO projects have begun to implement these KYC/AML policies in order to obtain greater legitimacy before financial authorities.
Therefore, the person who wants to invest in an ICO that applies the KYC/AML policies must provide a series of personal data and inform the origin of the money that is being investing for the token purchase.
- 1 ICOs complying with KYC/AML policies vs. those breaching them
- 2 Before this fact, there are three options for ICOs:
- 3 Telegram proposal to implement KYC/AML policies
- 4 Maximum encryption security
ICOs complying with KYC/AML policies vs. those breaching them
The implementation of these policies is totally voluntary because there is no central global authority within the world of cryptocurrencies that obliges ICOs to comply with these policies to operate in the international market. However, many ICOs have benefited from the KYC/AML policies and there are three main reasons for the ICOs to do so according to experts.
Entering the large cryptocurrency exchange houses
The financial authorities have put a lot of pressure on the Exchange Houses for a long time. Their objective is clear, they do not want the Houses of Change to become money laundering centers.
As a result, the Exchanges have begun to make decisions to implement the KYC/AML policies, including requests for personal data of their users, scanning of personal documents or verification of mobile numbers aimed to obtain the data of the person to ensure that they are not sanctioned and that their money does not come from illegal activities.
Due to these policies implemented by the Exchange Houses, it is very difficult for ICOs that have not applied KYC/AML policies in their token sales processes to enter their quotes. If the token is not traded in the main Exchange Houses of the market, it will be difficult for them to be positively revalued.
The ICO investment market is wider
The United States, China and the European Union markets are paramount for any ICO intended to be successful, and if they want to attract investors from these countries they need to apply KYC/AML policies because the authorities of these jurisdictions have been very active with these processes and have been especially tough against those currencies that do not apply these policies for their investors.
Before this fact, there are three options for ICOs:
- Apply KYC/AML policies and enter all jurisdictions, which translates into greater impact.
- Do not apply KYC/AML policies and operate in jurisdictions that do not request these policies, which would limit the scope.
- Do not apply the policies within jurisdictions that do request them.
This last assumption is the riskiest since the project developers can be fined and, in some cases, imprisoned.
It builds more trust on the investor
Anyone who wants their investment to be revalued wants to be sure that the project will be accurately executed. The risk of any financial authority acting against the project to invest because it did not apply KYC/AML policies is something considered by investors and that is why they value positively that these policies are applied in ICOs.
Telegram proposal to implement KYC/AML policies
Implementing the KYC/AML policies is tedious for some investors because they must provide their data to each ICO that requests it, which becomes repetitive and exhausting. But, precisely to avoid this, today we bring the Telegram’s Passport application.
This new Telegram application has a “unified authorization method for services that require personal identification,” and will help you only have to upload your personal data to a virtual cloud once and then share that data with the ICOs that request it.
The application developers ensure that any third-party’s web page can access this data as long as it has the express approval and authorization of the data user.
Maximum encryption security
The data uploaded to the virtual cloud is totally encrypted and not even the Telegram developers can see it. However, many people distrust this fact because the platform is fully centralized by Telegram.
Faced with this situation, the developers have said that they will move the platform to a completely decentralized system in the future, but they have not announced a specific date yet.