Global spending on KYC and AML compliance is projected to reach $8.2 billion by 2026. It also showcases examples of up to 40% reduction in onboarding time and up to 50% cost savings through blockchain-based solutions, according to McKinsey.
Industry experts estimate that all cryptocurrency wallets and exchanges will be required to implement KYC by 2024. To streamline the KYC process, exchanges are increasingly adopting technology solutions such as AI-powered identity verification, resulting in faster customer onboarding and improved compliance efficiency.
KYC-enabled crypto projects are on the rise, and several notable examples showcase their potential. Bitso, a Mexican exchange, has implemented KYC measures to comply with local regulations and has processed over $1 billion in transactions. Bitso’s use of KYC has also allowed it to partner with traditional financial institutions. Binance, a leading global exchange, has implemented a sophisticated KYC process to maintain compliance in various jurisdictions and has processed over $2 trillion in transactions. Meanwhile, Blockchain.com has launched a KYC-enabled wallet that allows users to easily buy and sell crypto while meeting regulatory requirements. These examples demonstrate that KYC-enabled crypto projects not only facilitate compliance with regulations but also enable partnerships with traditional financial institutions, while handling large transaction volumes.
A Thomson Reuters survey found that 74% of customers feel more confident with strong KYC procedures, and a GLEIF study showed that implementing KYC measures can reduce financial crime risk by up to 50%. Compliance with robust KYC processes and regulatory requirements is crucial for building trust and mitigating risks in the cryptocurrency ecosystem.
Blockchain technology presents both opportunities and challenges for KYC processes in the financial industry. On one hand, it can improve the efficiency, security, and accuracy of customer onboarding and compliance. On the other hand, it also poses technical, legal, and regulatory challenges that need to be addressed to ensure its viability and adoption. Nonetheless, blockchain-based KYC solutions have the potential to transform the traditional KYC landscape and enable a more customer-centric, decentralized, and interoperable approach to identity verification and management.
