Why the Implementation of KYC for ICO Transaction is so Important
by
on November 22nd,2018
Are you on your way to launch your own ICO- Initial Coin Offering? Do you have a great new idea that no one else has? But, to implement the idea into the reality you new talented team members and the most important you need an investment. For that, you can launch an ICO or STO- Security Token Offering. Now the question is why you need KYC and How it will affect your business?

ICO development

KYC- Know Your Customer is one of the most controversial subjects in today’s crypto world. It is a part of a set of regulations around AML- anti-money laundering. Nowadays the numbers of ICOs requiring KYC verification is growing. For that, it is essential to have a clear understanding of this procedure. Kyc is a process of identity verification of the customer. Once the token holder purchase the token/coin they required to provide with his/her personal data, then and only they can get the coin into their wallet.

Each backer is supposed to pass the KYC procedure in order to participate in the ICO. It is globally said that not conduction KYC for ICO transaction is illegal. So it is a necessity to measure to ensure that your ICO- Initial Coin Offering project is doing business with legitimate entities. If your business sells any ICO without KYC verification then there is the risk to freeze on your ICOs or requiring you to return the funds raised.

Also, KYC and AML regulations differ from one country to other. Like countries like China and India are not allowed to join ICOs according to some local laws. And the US has their own peculiarities. Also, the US government is now prosecuting ICOs that were held without KYC procedures.

Here are the Key benefits KYC offers to the ICO transaction,
One side the KYC undermines one of the key principles of the crypto world and on the other hand, it ensures the transparency of transactions. This is the most important thing which guarantees that the token sale is legitimate. Below are some main advantages that come with the implementation of KYC in your ICO transaction.

  • It prevents the scammers from participation in ICOs
  • It stands against criminal acts
  • It ensures the safety of investors assets
  • It helps you in avoiding legal, tax and reputational issues
  • It helps you in establishing credibility with banks
AML- Anti Money Laundering,
A very similar process to the KYC process AML- Anti Money Laundering allows the organization to filter the individuals who intend to use their services or really want to invest for money laundering purposes.

Both the KYC and AML processes require you to provide your personal information such as your full name, living address, DOB- Date of Birth also sometimes it require you to provide an image of a government-issued ID.

The main purpose of AML regulations is about stopping bad actors from hiding their ill-gotten gains. When it comes on AML it can be broken into two pieces, KYC and Transaction monitoring.

  • KYC gather the information from the contributors which includes the personally identifiable information, digital version of physical documents and in some cases it requires some biometrics. The main consent for your business is that the collected information is real and valid and it poses no risk to your business reputationally as well as financially.
  • On the other hand, Transaction monitoring refers to your commitment to monitor the collected funds.
There are lots of different opinions about the KYC. But the KYC for your ICO or Token offering is not something to be taken lightly. KYC is not the thing to be feared of, your business needs the secure development of your business and for the safety of your collected investment. Implementation of KYC minimize the number of criminal acts and ensure the safety of token sales. All you need is a trustworthy Token Sale Investor Dashboard services from the Blockchain solution provider. For any query about the implementation of KYC or to get services to build trusted digital identity technology contact Minddeft consultants.