What is KYC and Why Does It Matter? 1 154

After a hair-raising 2017 with scores of ICOs raising millions of bucks overnight, the morning after is hitting hard. In the cold light of day, many a prospect that seemed so attractive suddenly looks rather plain–or worse–they’ve run off with your money. Investing in ICOs isn’t for the faint-hearted. We all know there are a few crypto investors out there on their yachts, but there are plenty more licking their wounds at home. So how can KYC help? 

While the crypto landscape still remains for the most part, lawless, and regulation scarce, there are some ways that respectable ICOs can help rebuild investor confidence. One of them is by carrying out KYC (Know Your Customer) processes on their investors. In fact, KYC, rather than just a good idea, is becoming a prerequisite of doing business. Let’s check it out.

What is KYC?

Know your customer (KYC) is where a business verifies the identity of their clients. This may be by requesting proof of address, or government ID documents. Many ICO investors are now being asked to upload a photograph of themselves holding their document, so as to prove that it hasn’t been stolen and isn’t fake.

KYC is often also referred to when anti-money laundering (AML) regulations are enforced. Many different entities carry out KYC practices not only on their customers, but their employees and other stakeholders as well.

Why Does it Matter?

After all the high profile scandals, hacking attempts and scam teams, legitimate ICOs who want to repair their images should start to get serious about self regulation. It is a simple, yet meaningful way of demonstrating your company’s legitimacy. And here are five other reasons why KYC is so important, besides:

1. If you’re operating in the US in particular, KYC had better be high on your radar. Why? Because the SEC will be hot on your heels if it isn’t. With tougher regulation on the very near horizon, there have already been some cases where the SEC has demanded refunds on token sales that have not implemented these processes. Don’t think it’s that important? Just ask Protostarr; they’ll tell you.

2. If you don’t implement KYC you may not be able to get on the most reputable cryptocurrency exchanges. So, not running checks in the short term could hurt your potential profits in the long run. In fact, Bitcoin exchange, GDAX, that’s backed by the New York Stock Exchange, only lists a fraction of the thousands of tokens out there.

3. Know your customer gives you credibility. It will also allow you to meet banking and regulatory compliance as a precursor to anti-money laundering requirements.

4. You’ll be able to reach a larger audience. Not all jurisdictions require KYC, but the number is steadily growing and there are many places with a lot of investors that already require it. America, Britain, and Canada, to name a few.

5. Remember that the US dollar is still the world’s reserve fiat currency. Even banks outside of the USA are following their lead when it comes to crypto regulations, and violating US rules for global banks isn’t an option.

Complying with KYC voluntarily gives you many advantages and it benefits your customers as well. It may feel like an extra layer or a tightening of freedom, but if you’re serious about attracting investors who are rightly concerned about their money, KYC is a logical step.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

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Kenya Looks to Blockchain for Affordable Housing Project 1 143

The “Silicon Savannah” is moving deeper in direction of tech. The Kenyan government has announced a plan to manage the property allocation and funding of 500,000 affordable housing units with blockchain technology.

The units, which the government aims to build by 2022, will be set aside for households with an annual income below 100,000 Kenyan Shillings, about $990 USD. The World Bank estimates Kenya’s gross national income per capita at $1,290, according to Business Daily.

Blockchain will help ensure that the affordable housing is in fact going to those who fall below the average income bracket. Land title fraud has caused problems for Kenyans, as land grabbers target homes and even schools for illegal sales and development. Blockchain’s ability to store verifiable proof of title could help safeguard against fraudsters.

“Kenya will use blockchain technology to ensure the rightful owners live in government funded housing projects,” said Principal Secretary of Housing and Urban Development Charles Hinga, speaking with the World Bank on Monday.

Hinga said the plan will be financed by the National Housing Fund, which will raise over $59.5 million per month to get the project underway. But Cabinet Secretary for Transport, Infrastructure, Housing and Urban Development James Macharia said it will take $31.7 billion to build a million homes, each of which will cost between $3,000 and $30,000. Macharia called for support from private sector financing.

Under the financing plan, working Kenyans will contribute 1.5 percent of their salary, which will be matched by their employers. “On affordable housing one should not spend more than 30% of their disposable income for housing,” Hinga tweeted yesterday. “Anything above 30% is not affordable.”

A Trustless Relationship Between People and Government

The initiative represents a considerable push to solve housing and title problems for the nation’s lower income families. But how will the government decide to whom the housing units will go? With so much talk about financing underway, people are already calling on the government to outline a plan for how they’ll distribute the affordable housing units.

The government will need to deliver the housing projects in a time when, Hinga acknowledges, the public is skeptical. Earlier this year $78 million went missing in a corruption scandal involving the National Youth Services. Where there is little trust between the people and their government, Kenya hopes to establish transparency through the blockchain’s distributed ledger system.

Kenya’s Move Toward Tech

In March, Kenya’s Ministry of Information, Communications and Technology appointed a blockchain taskforce to explore the ways the nation could use blockchain technology in the public and private sectors. They called it the Distributed Ledgers and Artificial Intelligence taskforce, and by September its chairman, Bitange Ndemo, was calling on the government to tokenize the economy.

Ndemo also proposed government implementation of blockchain to certify the authenticity of retail goods, so consumers can be sure of where their food is coming from, for example.

Governor of Kenya’s central bank Patrick Njoroge has also voiced support for the use of blockchain technology to strengthen service delivery, although he’s opposed the use of tokens and digital currencies.

But the affordable housing initiative could be the Kenyan government’s first real world implementation of the blockchain.

There’s an Inflatable ‘Bitcoin Rat’ Staring Down the Fed 1 126

Someone has put a giant inflatable rat outside the Federal Reserve Bank in New York.

It’s covered in Bitcoin code, printed in rainbow colors, and is apparently a piece of installation art aimed at subverting the federal institution that controls the US dollar. Or is it pale, puffed-up pariah a commentary on Bitcoin bros themselves? Or does it have something to do with Warren Buffett, who earlier this year called Bitcoin “rat poison squared”? According to CoinDesk, who first reported on the inflatable rat, the meaning is intentionally ambiguous.

The artist behind the puzzling prank is Nelson Saiers. He describes his own work as “mystifying” and “singularly original”, notwithstanding the long history of rats being inflated as protests or used as economic and political icons in art and entertainment around the world.

“It’s art, so I hope they’re entertained by it,” he said, apparently implying that art is entertainment. “It’s informative, I hope people will learn [and] I’m hoping it’ll at least help people understand bitcoin better and be kind of faithful to what Satoshi would have wanted,” he added, citing the mysterious pseudonym of Bitcoin’s founder with a touch of reverence.

A $50 Million Artist

Saiers, a phD in theoretical mathematics, was a hedge fund manager who did that thing where you give up all the money to chase your dream of being an artist.

His financial experience includes a stint as managing director at Deutsche Bank’s prop trading desk, before becoming CIO of Saiers Capital, the hedge fund that bears his name. His creative career gives credence to the theory that working as an artist is more and more a privilege of the very wealthy.

CNBC estimated Saiers’s wealth to be around $50 million at the time of he departed from the financial industry to pick up his paintbrushes.

The Rat Joins a Tradition of Sculpture-as-Commentary in FiDi

The Bitcoin rat, which stands on Maiden Lane, isn’t the first pop up sculpture to grace Manhattan’s financial district. Last year, Kristen Visbal’s 50 inch bronze ‘Fearless Girl’ statue made waves by staring down the famous ‘Charging Bull’, to the outrage of ‘Charging Bull’ sculptor Arturo Di Modica. The 3.5 ton ‘Charging Bull’ itself was left on Wall Street in the middle of the night when Di Modica originally created it, obstructing traffic and drawing the curiosity of passers by.

When Saiers placed the Bitcoin rat, he initially set it up on private property and was promptly ushered off by security guards, who he says were good natured about the situation. He expects the sculpture to be more temporary than the aforementioned Wall Street bronzes, and will probably only be around for a few days.

A Critique of the 2008 Bailouts

The placement of the rat on Maiden Lane seems to be no accident, but rather a reference to the Maiden Lane Transactions, more commonly known as that time when the Fed bailed out the big banks after they all caused the 2008 market crash. The Bitcoin crowd’s antipathy towards the Fed and the big banks is palpable in Sairs’s rat sculpture, and while a more specific meaning eludes, perhaps the success of the piece depends upon its ability to start conversations about the state of finance.

We’ll leave it to the viewers to decide who’s the rat—the Federal Reserve, or Bitcoin itself—and what that means for the future of currencies.

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