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The Greater Significance of KYC

July 27, 2018

Why do we really have to jump through so many hoops to roll out Blockchain projects?

 

Is there something behind the growing regulation of the overall industry?

 

According to an original report by Coindesk, it can be logically argued that KYC or, know-your-customer, as well as even anti-money laundering practices, are really just increasingly easier ways for the banks to lock out Blockchain projects that might one day be their undoing.

 

Coindesk’s main argument on the subject is that keeping in line with these regulations cost the space billions a year, with little utility to show for it. In other words, it is not clear what value KYC firms and other similar organizations actually bring to the Blockchain industry.

 

To argue in this way, however, is problematic to say the least.

 

 Firstly, to even half-way claim that anti-money laundering laws are merely collusion among the banks to stop the rise of Crypto projects, suggests that banks are breaking the law to protect their own interests.

 

Saying this is not inherently false, but since it has not even begun to be definitively proven, it would be better to exercise caution when going directly at traditional banks, which are propped up by the US government when they fail.

 

In almost attempting to answer this issue related to their argument, Coindesk points out that KYC and related laws hurt all financial companies to the tune of the same billions of dollars a year.

 

While this may be the case, others would argue that it is necessary to prevent rampant speculation in the industry, such as that which may have played a big part in the 2008 financial collapse.

 

One element of the company’s argument against KYC which may in fact be quite valid, is the idea that as such regulations grow, the chances of immigrants and anyone who is poor or societally disadvantaged in some way being able to invest, dwindle.

 

Related to this, it appears that KYC and anti-money laundering requirements include having a very high net worth in order to legally invest, which may have caused average, everyday Crypto enthusiasts to be frozen out of the ICO space as regulations have grown to include KYC requirements.

 

If we could make one conclusion here, it should be that KYC and AML requirements need to be altered to be fair towards those who are not fortunate enough to have a large amount of money at their disposal.

 

If not, investing just might continue to be seen as something that is out reach for the average citizen, in the USA and abroad.

 

 

By: BGN Editorial Staff

 

 

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