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Crypto and Bitcoin are new additions to assets that require KYC by Crypto exchanges and investors.
Cryptocurrencies are proving their dominance in the financial market in spite of the volatility. It is pretty obvious that the crypto market is here only to thrive as one can see the overall gains in Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies. Every day thousands of new investors are being added to the cryptomarket. Therefore, to regulate the market, the governments and financial regulators have laid down certain rules. Crypto and Bitcoin KYC is one among them that crypto investors should follow before actually starting trading in cryptocurrencies. Major countries like the USA, Australia, and the UK have implemented KYC measures so as to bring some semblance to their financial systems by preventing independent financial transactions. It becomes imperative that investors make themselves aware of Crypto and Bitcoin KYC regulations.
As the crypto market has garnered humongous popularity because of its decentralized nature, following KYC measures definitely would be a great hurdle for crypto investors. The crypto market’s USP lies in its ability to keep its users and their credentials anonymous from centralized financial and regulatory authorities. As a result, crypto firms cannot and need not identify their customers, which is a financial nightmare for governing agencies. There is a clear conflict of interests with respect to KYC for Crypto firms. However, in the face of pressure and risk of penalization from regulators, most crypto firms have been compelled to introduce KYC policies and other regulatory measures.
All about Bitcoin KYC
In simple terms, Bitcoin KYC is a crucial piece of identifying data that can be used to track your transactions. Many believe that KYC goes against everything a Bitcoin maximalist trusts in, but generally, an average Bitcoin investor often knows no difference. But performing a simple on-chain transaction of sending Bitcoin from one address to another is recorded on the Bitcoin public blockchain. In addition to this, the personal information given by the investors to exchange allows transaction information to be recorded by the exchange. They can attach that transaction to the user’s ID and location, and they will know how much or how many Bitcoin was bought and how much was sent to another wallet address. Crypto investors, who value their privacy above everything else, might find these procedures and regulations to be an actual nightmare.
Can KYC norms benefit Cryptocurrency transactions?
Despite the operational changes and challenges that come with KYC regulations, crypto exchanges gain substantive benefits by ensuring regulatory compliance. KYC is meant to introduce improved customer transparency and trust. Verifying user identities can both improve transparency and build customer trust, when users are confident that the exchange is quite productive in ensuring that the users are unable to carry out malicious activities over their platform, it will eventually gain the trust of centralized authorities and of other investors who have not yet stepped into the crypto market due to fears of getting scammed or robbed of their profits.
Also, with legal cryptocurrencies continually evolving, implementing robust KYC policies can put companies ahead of the competition. Instead of running to catch up, they can eventually focus on improving conversion rates, streamlining transactions, and ensuring compliance with evolving international crypto guidelines. By demonstrating and implementing KYC due diligence, cryptocurrency companies can reduce their risk of legal challenges or regulatory penalties.
In the end, like everything else between privacy and freedom, Bitcoin falls into a conundrum as well. There is no perfect solution for investors to solve this KYC issue. But there is space for both Bitcoin KYC and non-KYC, investors just have to find their balance and know to keep each separate.
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