The world of cryptocurrencies and other digital assets, such as NFTs, has evolved significantly in the past few years. With asset diversity and high market volumes comes the need for more transparency, security, and usability of digital assets solutions. What excites me the most about this space is the ability of current market players to adapt to users’ feedback and regulatory rules promptly.
One of my favorite technological advancements that cater to tech-savvy consumers is customizable wallet names, provided by services like Ethereum Name Service and Unstoppable Domains.
Wallet name services
Ethereum Name Service (ENS) is the most widely used domain name service for wallets with 2.17 million registered names. It integrates with a number of wallets and browsers, and allows users to register a “.ETH” address, or import their DNS names into ENS, for an annual fee. This integration is meant to streamline receiving cryptocurrencies, tokens, and NFTs into different wallets linked to a simple and easy-to-read address.
Another such service is called Unstoppable Domains. Their users have full control and ownership over their domains through a one-time registration fee, without requiring any minting and renewal fees. Linking many services into one universal domain helps simplify the digital identity of Web3 users.
Integration with KYC and AML
I find it very valuable to integrate such name customization with Anti-money laundering (AML) and Know Your Customer (KYC) checking, not only because it brings transparency and security, but also helps streamline compliance processes.
Let’s take Unstoppable Domains as an example. Their team developed a KYC feature called Humanity Check, which essentially informs counterparties of the user’s identity verification, without revealing personal information. Going through this identity authentication results in a “Humanity Check verified” badge on their Unstoppable Domain profile. This feature is a huge enhancement for the KYC process and experience of Web3 users.
Whilst this is certainly a firm movement towards better customer verification and more secure wallet management, there could be another extra step for catering to AML purposes. I would see wallet history and risk level check as the ultimate solution to incorporating transparency in customized wallet adoption. As a user, I would simply be able to provide my unique wallet address with a KYC-verification badge and allow my counterparties to utilize KYC solutions to verify that my wallet hasn’t been used for illicit purposes. This can help me build trust with my counterparties.
Final thoughts
I look forward to seeing more development in this unique area of Web3 adoption. A simple thing as a wallet address opens the door to a number of both, potential compliance issues, and KYC and AML process enhancements. The one thing I believe is right to keep doing is to watch this space closely, observe major changes, and promptly react to them.