Whenever users sign up for a crypto payment gateway for the first time, they must complete the KYC (Know-Your-Customer) process. This essential step helps prevent fraud, ensures regulatory compliance, and governs users’ actions within the ecosystem.
While this procedure works well, a part of the Web3 community believes it goes against the tenets of blockchain. In recent times, several cryptocurrency trading platforms have been exploring the idea of a no-KYC approach. However, there has been pushback and criticism regarding how crypto exchanges can maintain the features of KYC while eliminating it.
This article will examine how a crypto payment gateway without KYC system can maintain oversight over user activity, balancing anonymity with fraud prevention. It will also ascertain if these measures are likely to gain acceptance from regulatory authorities.
There are numerous ways a crypto payment gateway can regulate user activity without KYC. Some of them include:
Proponents of the no-KYC feature argue that privacy is one of the tenets of blockchain technology. However, very few non-KYC measures are entirely foolproof. For instance, individuals can change their IP address using a virtual private network (VPN).
Users can also create multiple accounts on separate devices, enabling them to switch profiles if one is blacklisted or banned. Transaction limits are only partially effective, as malicious actors could patiently build their profiles and increase their limits to execute a “one big move.”
Even if technology-centered measures are effective, it remains uncertain whether they will convince regulators and the average user. KYC is a significant factor in building user trust, as it reassures them that the platform is genuine and its members credible.
Regulatory institutions are typically skeptical and demand crypto payment gateways to go above and beyond. Convincing governments that a no-KYC approach can prevent fraud might take substantial effort or even a miracle.
