Digital identity has been a hotly debated topic in the blockchain space for some time now. Many proponents believe that it is an essential component of any crypto currency ecosystem. On the other hand, many skeptics call it impractical and unrealistic.
Regardless of which side you are on, one thing is certain: regulators are coming for crypto, and digital identity will play a significant role in how they respond.
Digital Identity is the New Compliance Regulators are primarily concerned with three things: data protection, money laundering, and tax evasion. The concerns make sense because these three aspects happen to be at the core of most blockchain systems today.
For example, decentralized exchanges can help users maintain control over their private keys while still trading on an open marketplace. Decentralized exchanges are great for protecting user data.
However, it is still possible to perform fraudulent activities with digital assets and remain anonymous. Therefore, it can make enforcement nearly impossible for regulators if they decide to crack down on the space.
Maintain Privacy While Meeting Regulatory Compliance Standards Crypto currency tech designers are trying to create a solution that provides the same level of privacy expected in this space but still allows regulators to enforce the rules. The latter means complying with know-your-customer (KYC) and anti-money laundering (AML) regulations without sacrificing user anonymity or control over their assets.
How Digital Identity Can Help Your Business Comply With Regulations?
Companies can use blockchain technology to create a system where users control their data and assets. Similarly, the blockchain should provide companies with the information they need to remain compliant. This digital identity standard is already being used by some major tech players like Microsoft, Apple, Facebook, and Google.
Keeping Up With Crypto Regulations: A Survival Guide for Businesses Consequently, it is paramount to put together a helpful guide that shows you the best practices companies should follow if they want to keep up with crypto regulations. The guide is implemented by creating a digital identity strategy or simply complying with the existing rules and regulations.