Why the Crypto Market Needs KYC and How to Stay Anonymous without Breaking a Law

Anonymity became a barrier, standing in the way of cryptocurrency mass adoption by the traditional financial market. At the same time, abandoning confidentiality contradicts the core concept of digital assets. To satisfy interests of both cryptocurrency users and regulators, a trade-off was needed. The solution has already been created. Let’s dive deeper and learn how to remain anonymous in the crypto market without breaking a single law. What is KYC and what does it have to do with cryptocurrencies? The abbreviation KYC stands for Know Your Customer. This definition is often used in the context of the financial market. KYC refers to a range of processes aimed at ascertaining the identity of the person who plans to conduct a financial transaction. Cryptocurrencies are a financial instrument that, by the covenant of the founder of Bitcoin Satoshi Nakamoto, should be anonymous. From regulators’ point of view, fully confidential transactions carry risks associated with money laundering, terrorist funding, and other illegal activities. That is why governing authorities need to pipe cryptocurrencies’ users through KYC procedures. Crypto market participants are also interested in having convenience for all parties — users and regulators — relating norms for person identification. In fact, the government can not allow the spread of an anonymous financial instrument that they can not control due to its confidentiality. Transacting wit...