The IOTA Foundation has created a mechanism for certifying Web3 users while protecting their privacy. The entire identification procedure is tokenized, giving users the ability to authenticate their identity in Web3 apps. Walt.id, IDnow, Bloom Wallet, and SPYCE.5 all provided assistance to the IOTA Foundation.
To combat money laundering and terrorism funding in the cryptocurrency sector, the upcoming EU and worldwide crypto laws will require relevant parties to implement strict anti-money laundering (AML) and Know Your Customer (KYC) techniques. At this moment in time, it is not possible due to a lack of appropriate instruments.
The recently introduced Transfer of Funds (TFR) and the upcoming Anti Money Laundering Regulation (AMLR) impose anti-money laundering requirements on Crypto Asset Service Providers (CASPs) such as crypto asset exchanges, requiring them to collect information about users and identify customers who use self-created wallets.
According to the TFR, every crypto asset translation with CASPs must include sender and receiver information, much as bank transactions. In addition, if the transfer is more than EUR 1,000 to or from a self-hosted address, the CASP must determine whether the address belongs to the sender or receiver.
In order to comply with these rules, Web3 applications will need to look for ways to ensure that their users can be recognized while also respecting the privacy and safety concerns associated with distributed ledger technologies.
The goal of their approach is to protect personal information and ensure that it is never recorded on-chain. Users will have complete control over their data and can identify themselves with numerous Web3 applications.
The IOTA Foundation and its associates have created a reusable KYC system for onboarding users to all dApps and applications. All while meeting regulatory obligations.
IDnow is a leading identity authentication platform supplier in Europe, while Walt.id provides an open-source decentralized identification and wallet architecture. Bloom, for example, is a wallet that supports IOTA, Shimmer, and the EVM ecosystem. SPYCE 5 is a specialist in the use of hybrid blockchain technology.
All of these cooperative ventures are trying to develop groundbreaking KYC solutions for Web3 while retaining privacy as a top concern.
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