The know-your-customer guidelines’ objective is to prevent banks from being victims of criminal activities as well as money laundering.
Knowing who your exact customers are is a great advantage.
However, many disputes have arisen regarding the level of protection of such sensitive data.
When did these regulatory standards become beneficial only for the one side? Did they become risky? Are there some successfully ignored drawbacks?
The KYC and other related procedures are designed to help organizations skillfully control their risks.
Nevertheless, when it comes to those who provide this information, there is a safety performance lacking.
Gaining access to such category of documents can do harm to customers, and that is exactly why it is important to react.
KYC Consent Can Make You a Victim
KYC compliance is, basically, a standard of regulation that demands to be informed about your identity as well as your finances.
These regulations are adopted by cryptocurrency exchanges more and more often.
With these adjustments comes another wave of hacking activities, particularly targeting crypto exchanges. Hence, one question remains—Is KYC secure?
Due to the reason financial crimes reached a very high level, KYC, ABC (Anti-Bribery and Corruption), and AML (Anti-Money Laundering) compliances are currently used more than ever.
In order for these regulations to play their role perfectly, the users are required to enter sometimes very delicate personal information.
Further, this data is used by the organizations it is provided to with the purpose of preventing fraud and other illegal activities.
The current situation of the compliance rules in the classic financial markets is far more different from the one in the crypto market.
It is widely believed that still to this day, 2/3 of cryptocurrency exchanges in U.S. and E.U. regions do not adhere to the requirements.
All the crypto exchanges ask for is contact information such as phone numbers and email addresses.
As a result, the majority of banks do not prefer working with cryptocurrency exchanges.
Since the banks are no longer an option for some cryptocurrency exchanges, they are forced to relocate to jurisdictions that are far less regulated, causing security breaches to arise.
Expectedly, the less regulated a system is the easier it is to be hacked, cracked and shut down.
Because of the reason many crypto exchanges are compelled to find alternative areas of authority, the safety is jeopardized, making the users potential victims of cybercrimes. Such conditions are a hacker’s perfect scenario, really.
Moreover, the ones who are affected the most sometimes have their hands tied and cannot do anything about it.
The Need of KYC Procedure
The bottom line is—KYC regulations need to be taken more seriously when it comes to the crypto markets and their participants.
The cryptocurrency markets are constantly changing, and the time is always right for positive advancements.
Although it is true that the crypto space is moving in a rather faster pace than the classic financial markets, it still needs to be improved.
Cryptocurrency exchanges should definitely prioritize the protection of their users’ data solve this problem efficiently once and for all.
If secured right, KYC procedures can be truly beneficial for both ends.
As in any other kind of market, regulations are necessary for the market of cryptocurrencies too. The safety and the positive experience of the users must come first, and it is up to cryptocurrency exchanges to find a way and make that happen.