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Tezos Foundation Introduces KYC/AML Policy amid Community Backlash

Tezos Foundation Introduces KYC/AML Policy amid Community Backlash

Reading Time: 2 minutes by on June 18, 2018 Altcoins, Bitcoin, Blockchain, Business, News, Regulation
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Tezos Foundation announced the introduction of Know Your Customer/Anti-Money Laundering (KYC/AML) checks for its contributors, drawing a backlash from its followers on social media.

The new policy “requires contributors to its fundraiser to complete this KYC/AML process to access their recommended allocations in its proposed genesis block.” Added identity verification will follow the account registration, and it will function as a prerequisite for the reception of an activation code acting as a public key hash, i.e., an access key to the allocation in the genesis block.

No Immediate Impact on Betanet

The move came in response to the rising regulatory pressure, to which the Foundation responded by stating that while it opposes the overused collection of personal data online, it still had to find the way to operate in line with the changing regulatory environment. At least, they say, the contributors do not need to complete the procedure before the launching of the Foundation’s beta net which is the final operative stages at the moment.

Still, the process will be obligatory for those who want immediate access to their allocations as soon as their betanet is launched.  

To meet the introduction of new measures as streamlined as possible, Tezos will implement appropriate KYC/AML checks with the help of a third-party partner in charge of overseeing this process. Before these checks, the contributors will be provided with access to “Check Your Contribution” tool which is supposed to streamline their compliance with the new measures.

Breitman: Not My Call

While the Tezos Foundation admits that this type of mandatory checks has become a norm for blockchain projects and the “best way forward,” the post on the company’s official Reddit has drawn much rage among the followers and users alike.

In response to the official announcement of a new policy and the negative feedback it received, the company’s co-founder Arthur Breitman responded with a simple “Not my call” message. Once a user contrasted his status as a co-founder with an inability to act in this case, Breitman agreed with the observation.

On the other hand, the company’s statement on the matter quotes the change in the attitude of the industry towards regulatory measures, reminding the users that there was no appropriate blockchain ecosystem in existence back in its donation period in July 2017. From that period on, the maturing of the industry meant that the verification of contributors in line with KYC/AML became the best practice available.  

Rising Regulatory Pressure

KYC/AML due diligence process has the identity verification process at its core. The procedure aims to ensure that the funds in circulation are acquired lawfully and that the persons involved in the transactions are not blacklisted or a part of criminal or terrorist organizations.

The European Union has been at the forefront of the effort to create a regulatory framework that will prevent the undesirable uses of cryptos for the perpetration of criminal activities. Similar measures have been implemented in South Korea, Japan, and the United States, with their financial institutions monitoring transactions and traders to check for any irregularities.

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