The digital currency exchange Bitstamp has chosen Onfido’s identity verification engine to onboard new customers. Onfido provides a full-stack identity verification platform, which will assist Bitstamp in processing its large amount of new customer signup requests.
In December, due to the massive surge in demand for cryptocurrencies, many exchanges were forced to close their doors to new customers. This is reflective of a larger issue within the crypto ecosystem, that of scalability. The existing infrastructure did not have the capacity to handle all of the new traffic, which resulted in many would-be customers being unable to open trading accounts on various platforms, and caused long delays in transaction speed on the Bitcoin and Ethereum networks.
According to a recent press release, Bitstamp has been receiving more than 100,000 new account requests daily since December. At the moment, Bitstamp is the EU’s largest exchange by volume, and has over three million customers. To their credit, Bitstamp never shut down new customer registrations, even though trading volume on the change increased by over 1,000 percent in 2017. In addition, Bitstamp has responded to the surge in demand for new accounts by quadrupling its staff size.
Nejc Kodrič, the CEO of Bitstamp, explained in a press release,
“Onfido’s powerful machine-learning technology has allowed us to automate our new customer identity verification process, and still maintain our high standards when it comes to KYC [Know Your Customer]. We’re already seeing positive results when it comes to speeding up our verification process.”
As demand for cryptocurrencies has increased, so have the calls for regulations. The United States and Japan have both stipulated that digital currency exchanges must comply with Anti-Money Laundering (AML) laws by implementing Know Your Customer (KYC) protocols. In addition, the United Kingdom and South Korea are working on putting laws in place to regulate Initial Coin Offerings (ICOs).
All of this is good news for KYC platform providers, such as Onfido. Husayn Kassai, the CEO of Onfido, explained
“We are quickly becoming the go-to provider for KYC in this space, and are helping make it more secure. We now work with 15 cryptocurrency companies, allowing them to scale customer onboarding smoothly, and be more vigilant as the digital currency industry faces more scrutiny and regulation.”
While some privacy enthusiasts are not happy about the increase in government scrutiny of cryptocurrencies, the increased attention from regulatory bodies and the demands for KYC protocol implementation on exchanges are clear indicators that digital currencies are gaining legitimacy in the public eye. This perception of legitimacy is crucial in the endeavor to bring cryptocurrencies and mainstream finance together. Ultimately, bringing KYC to crypto will help dispel the erroneous notion that virtual currencies only hold appeal for criminals, and will instill confidence in investors who had previously been wary of getting into the digital currency economy.