Cryptocurrencies like Bitcoin, Ethereum, and Dogecoin are becoming increasingly mainstream, but the market for them is still new. Financial regulators are continuously reviewing the procedures of cryptocurrency exchanges and other organizations to prevent identity theft and money laundering. As a result, regulatory measures for the crypto sector are always changing.
Unfortunately, fraudsters’ interest in cryptocurrencies has grown in recent years due to their meteoric rise in value. Since authorities require assistance in keeping up with rising consumer demand and international wire transfers of enormous sums of money, this creates a practically ideal climate for money laundering and identity theft.
Due to security flaws in the crypto exchange industry, fraudsters have resorted to stealing victims’ personal information in order to sign up for new accounts under fictitious names and take over their existing accounts. Crypto companies have recognized the need for greater security measures and regulation due to the volume and complexity of these breaches.
Anti-money-laundering (AML) and Know-Your-Customer (KYC) regulations are getting more stringent, and as a result, all companies that facilitate the buying and selling of cryptocurrencies must comply with them. Therefore, businesses that facilitate the buying and selling of cryptocurrencies need to adapt to meet the requirements of these new rules.
Challenges in Age Verification for Crypto Firms
Traditional methods of verify customer age, such as having them upload a photo of their ID and a picture of themselves or their signature, still need to be improved. They are not compliant with Know Your Customer and Anti-Money Laundering regulations, and they may be easily forged using information and photos taken from social media or the dark web.
In order to verify the age of its users and protect their funds, crypto firms need to implement increasingly stringent age verification systems. While many businesses in the cryptocurrency industry place a premium on staying in line with regulatory requirements, they also need to ensure that account creation, login, and trading are simple processes for their customers. Striking a balance is essential.
The Blockchain’s Age Verification: What Is It?
In an effort to provide a better service, businesses constantly track and record their customers’ every move. Facebook is working on artificial intelligence bots that can be deployed in the messaging app to enable users to place flower orders using simple voice requests. This updated data is based on users’ dynamic identifiers, which give a clearer picture of their true identities. A rise in fraud and privacy invasion could result from a breach in the security of this dynamic identity.
Crypto organizations are increasingly relying on sophisticated age verification technologies to authenticate their users as a means of balancing security, compliance, and user experience. These services verify users by analyzing data from many sources, such as government-issued IDs, user-provided information like phone numbers and IP addresses, and third-party data like voter registration rolls. These businesses are able to effectively reduce the possibility of identity fraud by cross-checking numerous data sets.
Importance of Identity Verification in Crypto Businesses
When it comes to crypto businesses, verifying user identities is essential, especially throughout the onboarding process. Common scenarios where proof of age is requested include:
- Making a fresh profile.
- Performing a major monetary exchange.
- Transferring the contents of a wallet to a new wallet.
There could be applications where verifying one’s identity is essential. Entering a code, uploading an ID document, or sharing a photo or video of themselves are all methods by which a user might prove their identity.
Many users would rather have a simple account setup and use process, even if identity verification can assist in reducing fraud and increasing trust in the site. It may be challenging for crypto businesses to find a middle ground between satisfying users and keeping their money safe.
Why is it Important to Validate Ages in Crypto Industry?
Fraudsters who use stolen or made-up identities pose a growing risk to the cryptocurrency industry. Some examples of the dangers these companies confront include credit card theft, phishing, and unauthorized money transfers. Theft and money laundering via account takeovers, in which criminals pose as legal users, are also on the rise. These types of actions make many Bitcoin users uneasy about making purchases or sales on the market, which undermines confidence and slows growth. According to the GBG State of Digital Identity 2020 poll, one-third of consumers believe their personal information is for sale, and half of users worry that their personal data will be revealed when transacting online. In order to provide their customers with the safe and convenient online purchasing experience they have come to expect, crypto firms are turning to digital identity verification to detect and prevent fraudulent behaviors in a timely manner.
In an effort to provide better service, businesses constantly track and record their customers’ every move. Facebook is working on artificial intelligence bots that can be deployed in the messaging app so that users can order flowers using simple voice requests. This updated data is based on users’ dynamic identifiers, which provide a clearer picture of their true identity. An increase in fraud and privacy invasion can result from a breach in the security of this dynamic identity.