There have been many recent events in the financial markets that show why we need to move to decentralized markets collectively, but there are still bottlenecks when it comes to regulation. To improve in this area, distributed smart contract platform Qtum has partnered with Blockpass to implement on-chain know your customer (KYC) regulations. In order to conduct financial transactions in regulated jurisdictions, such as securities trading, KYC and anti-money laundering (AML) measures are put in place to root out bad actors. With the pervasive narrative that criminals, terrorists and despots use cryptocurrencies to launder money, regulated decentralized platforms can add more legitimacy, security and authority to the blockchain space.
Blockpass Enables Greater Retail and Institutional Opportunities
Blockpass is one of the pioneers in the digital identity verification space. Using its proprietary technology, platforms can implement a one-click solution that acts as a gateway to regulated financial services. Once the user's identity information has been inputted for the first time, interacting with any application on the network is easily accessible simply through the click of a button. Blockpass allows its users to add, store and manage their digital identity, granting or revoking identity access for dApps.
To promote the use of its tech during the challenging economic times caused by the pandemic, Blockpass has reduced its customer service costs by 90%, another incentive to push people to register and start using regulated dApps.
The integration is a big step for Qtum, one of the largest and most adopted decentralized smart contract platforms on the market. This new addition will allow the creation and usage of regulated applications, a necessary step for mainstream adoption. There will be a variety of suitable offerings that identity verification is needed for, such as the decentralized exchanging of securities, lending, borrowing and staking.
With the growth in decentralized applications resulting in much higher fees and slower transaction times on Ethereum, the largest host of decentralized applications, Qtum is making a play to fill the gap. This will give Qtum the ability to directly compete against the most prominent players, creating the possibility for investors, speculators and financiers of all levels to utilize a faster and cheaper platform in a safe manner.
When asked about the new partnership, Qtum co-founder Jordan Earls commented:
"On-chain KYC will become a critical component for numerous protocols on the decentralized web. Rather than hinder innovators who are seeking to stay compliant while enabling new technologies, the Qtum Foundation would like to support those builders by backing Blockpass' expansion to the Qtum blockchain."
No One Wants Another XRP Situation
The importance of following regulatory compliance has become especially evident in the cryptocurrency ecosystem in the last few months, with the Securities and Exchange Commission (SEC) pursuing charges against Ripple Labs and two of its executives. The charges state that the parties took part in the sale of an unlicensed security, XRP, to the tune of over $1 billion. Ripple Labs has been operating for over half a decade; if they were proactive in their regulatory compliance, they would have most likely never faced this problem, which caused their native cryptocurrency to be delisted from multiple exchanges. These charges coincided with one of the largest bull runs in crypto history, one that XRP was essentially left out of following regulatory speculation.
We've also seen the SEC pursue unregulated exchanges and traders in the crypto space, so adding a KYC option for applications will allow Qtum to mitigate these potential hazards. As the industry continues to grow and adapt, rules will become more transparent and users will have a better idea of legalities. For now, however, the implementation of Blockpass' identity verification technology will help to deter illicit behavior.