People value the anonymity of a decentralized blockchain. Each user has a pseudonym in the form of a wallet address, which is stored in a decentralized ledger for every cryptocurrency transaction.
So why do crypto platforms need identity verification?
Fraud and the potential for harm have become too great to ignore, and regulators are paying attention, according to Christy Goldsmith Romero, a commissioner at the U.S. Commodity Futures Trading Commission. The commissioner also noted that cryptocurrencies are being used to fund cybercrime.
“It’s essential for governments and particularly the industry to address what makes crypto so attractive to illicit finance,” Romero said, “and that is the allure of anonymity.”
There remains uncertainty about what new regulations will dictate and how they will be administered. Crypto platforms may have to perform Know Your Customer (KYC) checks on millions of users while managing regional verification and regulatory differences across the globe. The companies that overcome these challenges will have comprehensive compliance plans in place.
A platform approach to comprehensive identity verification
Verifying a person’s identity is a complex challenge with disparate sources of PII data, government IDs, biometrics and more. Multiply that by hundreds of countries, each with different legal requirements, and it becomes almost impossible for a team to handle the workload with traditional manual processes.
Identity verification providers enable crypto platforms to scale efficiently. Thanks to automation and sophisticated AI-driven technology, businesses can manage risk while optimizing their costs.
With the rise of holistic identity platforms, companies can now access a one-stop partner for all verification needs, including PII data, document and biometric checks for KYC, watchlist screening and ongoing risk monitoring for Anti-Money Laundering requirements, vetting from people of significant control or ultimate beneficial owners, and company registration details for Know Your Business (KYB) compliance. This data is available through a single workflow, making verification lightning-fast.
With multiple connected services and streamlined integration, organizations gain the ability to adjust their verification workflows to match changing market conditions.
Establishing trust anywhere with any user
Blockchain and cryptocurrencies’ decentralization can empower people worldwide, but there is a disparity in the technology’s adoption rate across the globe. Some regions are joining the crypto revolution much faster than others, and the accessibility of verification methods plays a role. That means there is untapped market potential for growth-oriented crypto platforms.
Identity document verification is essential for companies operating in multiple markets worldwide because it can provide coverage for diverse global populations. Verifying individuals using their government-issued IDs and face biometrics is an accessible way to securely onboard anyone anywhere.
Qualified user experience
When crypto platforms add or update their onboarding, monitoring and reverification processes, there is a risk of creating too much friction and alienating potential good users. Fast, convenient onboarding is crucial for crypto platforms to attract and retain users. In an increasingly competitive market, crypto platforms that prioritize the user experience can gain a significant advantage.
By implementing document verification with intuitive interfaces, guided instructions and multichannel browser or mobile support, companies can build confidence and loyalty among users. Selfies for biometric verification can further build trust in the platform by reassuring users their account is secure, and the platform is protecting them from impersonation and identity theft. Advanced technologies such as machine-learning algorithms for image auto-capture and optical character recognition can further streamline verification, making it faster and more convenient.
A key differentiator for crypto platforms is their ability to communicate with users in their own language. That means the identity verification process should also be localized. Localized text can be adapted to the language preference in the system settings of users’ mobile devices, allowing them to read translated instructions for submitting their documents for verification. On the back end, the text is extracted in global character sets, such as Chinese characters, Arabic script and the Latin alphabet.
Agile verification is key to growth
The cryptocurrency industry has delivered multiple benefits, including financial inclusion, decentralized finance and global accessibility. At the same time, it faces challenges, including security threats, money laundering and regulatory concerns.
A comprehensive identity verification platform can help companies overcome those challenges and meet user expectations for fast, convenient onboarding experiences.
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