As the importance of blockchain technology grows, many people are looking for ways to get involved in the crypto world. One of the most important aspects of any cryptocurrency or blockchain project is KYC/AML.
Without proper KYC/AML procedures, your project could be at risk for fraud and illegal activities. This article will discuss the types of KYC solutions available and how to choose the right one for your project.
We will also provide tips on how to implement these solutions properly. Finally, we will discuss the future of KYC/AML in the crypto world.
What is KYC/AML, and Why Do Crypto and NFT Projects Need It?
If you're involved in cryptocurrency or NFT, you're probably well aware of the term "KYC/AML." But what exactly is it?
AML stands for "anti-money laundering," while KYC stands for "know your customer." Together, they form a set of guidelines and best practices that businesses can use to prevent illegal activities.
There are a few reasons why crypto and NFT projects need to take KYC/AML seriously. First, many countries have laws and regulations that require businesses to implement KYC/AML measures.
Second, even if a project isn't legally required to, it's still in the project's best interest to take KYC/AML measures. This is because projects that don't take KYC/AML seriously risk becoming vectors for money laundering or other illegal activities.
The Different Types of KYC Solutions
So, what are some of the best KYC/AML solutions for crypto and NFT projects? Here are five of the most popular options.
#1 - SolidProof
SolidProof is a German-based KYC provider with a simple, efficient and smooth process that adheres to the highest security standards. The company's services are affordable, have no hidden costs, and offer a free audit for every project.
Moreover, SolidProof's highly experienced team profoundly understands the blockchain industry and related regulatory requirements. The company offers a broad range of services, including KYC/AML compliance, blockchain consulting, and smart contract auditing.
SolidProof's KYC methodology leverages document verification, video identification, and address verification. The team also delivers a report that classifies identified vulnerabilities by severity and suggests possible remediation measures.
This company will soon launch an automated audit tool to help those without time for a classic audit. The system speeds up the review process by automatically verifying the codebase, identifying potential vulnerabilities, and providing remediation recommendations.
#2 - Identity.com
Another popular KYC solution is Identity.com. The project focuses on decentralized identity verification and offers a marketplace and gateway protocol. The company does not trade personal information, which increases security and privacy. The project also focuses on decentralization.
Identity.com falls into the category of open-source KYC solutions. Specifically, this is possible through CVC tokens to access on-demand, secure identity verification that is low-cost and reusable. A staking mechanism is also in place to ensure good behavior from users, requesters, and validators.
The process begins when a user approaches a requester for a service or purchase. The requester will query the credential wallet for the required PII attested by a reliable validator.
Once the user approves the information in the credential wallet, the system transfers it to the requester. If no valid attestation is available, a validation process will occur. The validator(s) that issued the attestations get paid in this process.
#3 - Chainanalysis
Chainanalysis is another famous name in the crypto industry, providing many security solutions for crypto and NFT projects. The company has a strong global presence in New York, with offices in several other countries.
Chainanalysis was born as a pure blockchain data platform. The company has since then enhanced its offering on the crypto market and now provides several security-related services, such as:
Crypto Investigations and Special Programs: This is a suite of services designed to help resolve cybersecurity breaches and trace stolen funds. It targets exchanges, financial institutions, and cybersecurity companies.
Crypto Incident Response: These are services offered by professionals for recovering lost funds in the event of a cyber incident.
Training & Certification: The company offers crypto fundamentals and product courses.
Furthermore, Chainalysis provides several solutions for both crypto and NFT projects. For instance, its compliance solution helps companies ensure they meet evolving local and global regulations.
The investigations solution helps companies detect and investigate crypto crime. The DeFi solution enables users to participate safely in the decentralized finance revolution. Lastly, the NFT solution ensures safe access and controls for NFTs. If you are looking for a comprehensive suite of security solutions, Chainalysis is a company you should consider.
#4 - Elliptic
Elliptic is another excellent solution for KYC and compliance needs for traditional financial institutions and crypto and NFT projects. They offer a wide range of services, including wallet screening, transaction monitoring, VASP screening, and enhanced due diligence.
In addition, they offer to consult services to help you design or review your risk policies and procedures. You can also configure risk rules and conduct AML risk assessments with their help.
Another great thing about Elliptic is that they are always up-to-date with the latest regulations. This means you can be confident that your project will remain compliant even as the regulatory landscape evolves.
Elliptic has a highly diversified set of features. For instance, this company may help you detect high-risk crypto transactions, speed up compliance checks & minimize manual intervention. They have numerous other features like identifying high-risk customers, tracing the source & destination of funds, and simplifying SAR submissions.
Concerning the company's history, it was founded in 2013 by James Smith and Tom Robinson. They both had experience working for regulated financial institutions. The team was well aware of the need for compliance tools based on blockchain analytics.
#5 - Blockpass
Finally, Blockpass is a solution you may want to consider for your crypto or NFT project’s KYC needs. Blockpass is famous for its quick, easy signup process and automated KYC solution.
Blockpass offers a full-service, comprehensive solution for all onboarding needs – including AML watchlist checks. If you’re looking for a fast, simple, and easy-to-integrate solution, Blockpass is worth considering.
Another aspect to consider is that Blockpass users create a reusable identity, meaning documentation delivery and verification are streamlined processes. This could be extremely helpful for your project if you plan on onboarding many users.
Moreover, Blockpass is known for being one of the most affordable KYC solutions on the market. If cost is a significant concern for your project, Blockpass is a solution you’ll want to consider.
Finally, keep in mind that Blockpass is a decentralized network of over one million crypto enthusiasts. This is a huge community of people that you could tap into for your project. Recent crypto history has proved that communities can play a significant role in the success or failure of a project.
How to Choose the Right KYC Solution for Your Project
At this point, it is essential to understand how to select the best one for your project. The factors you must consider while choosing a KYC provider are:
The provider’s global reach: You will have to consider if the provider has a global reach or not. There is no point in selecting a provider with no global reach. This choice will limit the number of people participating in your project.
The provider’s onboarding process: The provider you select must have a simple and easy-to-use onboarding process. If the provider has a complex onboarding process, it will deter people from participating in your project.
The provider’s customer support: You must select a provider who offers excellent customer support. This is important as you will need to contact the provider for any issues with the KYC process.
The provider’s pricing: You must select a provider who offers competitive pricing. Choosing a provider charging exorbitant fees is useless as it will deter people from participating in your project.
If you consider the above factors, you can select the best KYC solution for your project.
Implementation Tips for KYC Solutions
As promised, here are five tips for successfully implementing a KYC solution for your crypto or NFT project:
- Define your customer base and target market. This will help you determine which KYC solution is right for you.
- Do your research and compare different KYC providers. Make sure to read reviews and compare pricing.
- Ensure your chosen KYC solution complies with all relevant regulations.
- Test your KYC solution thoroughly before rolling it out to your entire customer base.
- Have a plan for dealing with customer data once your KYC process is complete. Ensure you have the appropriate security measures to protect this data.
Following these tips ensures that your crypto or NFT project will comply with all KYC regulations. In this way, you will be able to have a smooth implementation process.
Wrapping Up - The Future of KYC/AML in the Crypto World
The future of KYC/AML in the crypto world is looking bright. With more and more projects implementing KYC solutions, we see a move towards a more regulated and compliant industry.
This is a positive development as it will help to legitimize the industry and attract more mainstream investors.
Also published here.