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KYC Solution Outline
This document outlines a solution that bridges the KYC (Know Your Customer Process), requirements of the regulator & the anonymous nature of the public blockchain networks like Ethereum.
A truly born in the Web 3.0 virtual organization, like DAO (Distributed Autonomous Organization) does not need KYC process; For example, the first DAO has just identified the curtaors by their name, the members/share holders may choose to remain, anonymous or pseudonomous.
However, the organizations existing in physical world are regulated and must comply with KYC.
Incorporated organizations operate under the law of the land, and are regulated by the Government Agencies.
For example, in India, all companies must register with MCA, Ministry of Corporate Affairs and depending on the type of the incorporation must comply with Companies Act, 1956, 2013 or Limited Liability Partnership Act, 2008. Further compliances are needed for Income Tax, and for listed company SEBI (Securities and Exchange Board of India) is an additional requirement.
The Indian Banking Regulator RBI, Reserve Bank of India monitors all legal entities for complaince with Foreign Exchange Management Act, Prevention of Money Laundering Act, 2002
For financial sector non banking and micro finance companies, additional compliances are imposed.
Payments are regualted with Payment and Settlement Systems Act 2007
One common thread across all the regulations is to know who are your stakeholders. For Indian citizens, Know your Customer process can be implemented electronically through the eKYC service.
For the purpose of this document, we use "KYC" as a moniker for Know your Stakeholders.
None of the regulators across the world, allows for anonymous stakeholders. Whereas, open public Blockchain Networks like Bitcoin and Ethereum are Anonymous.
Thus a solution is needed for bridging the regulators' requirements with the anonymous Blockchain Addresses.
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Crowdfunding
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P2P (Peer to Peer Lending)
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Equity & Project Funding.
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Exchanging fiat currency with cryptocurrencies
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Corporate Voting
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Loyalty Points
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Utility recharging and Bill Payments
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Financial Supply Chain
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Bidding and Marketplaces
All Indian residents, down to the very bottom of the economic pyramid,can and do have a digital identity called AADHAAR ID, issued by Unique Identification Authority of India
Section 18 of The Information Technology Act, 2000 provides the required legal sanctity to the digital signatures based on asymmetric cryptosystems. The digital signatures are now accepted at par with handwritten signatures and the electronic documents that have been digitally signed are treated at par with paper documents. - source CCA website
Also, directors of companies, high value tax payer, bidders of any government tenders must has a PKI digital signature, issued by the licensees of the Controller of Certifying Authorities(CCA)