Why should an ICO carry out KYC checks?

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In 2018 we are experiencing a tremendous increase in ICOs, whereby a number of crypto currencies are sold in the form of what is commonly referred to as tokens.  Although in the crypto space the phrase ‘know your customer’ seems insignificant or of little importance, some jurisdictions are already asking for KYC checks or are in the process of launching regulations which will set KYC checks as mandatory.

KYC checks are of importance because ICO companies would be able:

  • To filter serious investors from scammers and fake profiles, even more when an ICO would have run a bounty scheme to attract followers and incentivise investment
  • To prevent the reputational risk of the ICO and any surrounding adverse media.
  • To increase the authenticity of the investment/s and give peace of mind to the investor/s
  • To Serve as a natural filter to ‘dodgy’ investors and/or investors trying to launder funds generated from illicit activity
  • To interact with other players (ex. Crypto currencies exchanges) in the industry.

QGEN has been working on an ICO-specific offering, through which ICOs can white label QGEN’s service offering to onboard investors.  The steps in such an investor/s on-boarding process for ICOs include:

  • User registers on Token Sales web platform
  • During the registration process the investor follows a number of KYC steps (this is done via QGEN’s ICO-focused API)
  • QGEN verifies the investor or otherwise
  • QGEN returns a score sheet (result) to the ICO company
  • The ICO company decides whether to accept or not the investor based on its risk appetite
  • KYC checks are based on client requirements, regulatory frameworks and investment value brackets.

QGEN offers an API to companies running ICOs.  This is to be implemented in a seamless manner at ICO web portal front-end.  QGEN has signed a string of agreements with various global data sources, to make these KYC checks more holistic, efficient and effective – with the ultimate aim of safeguarding ICOs from fake accounts and/or fraudsters.  The offering is fluid enough to be configured by ICOs – with a multi-tiered rules engine.

Philip Bugeja, Head of Compliance at QGEN Group Ltd, states that ‘… it is always advisable for ICOs to carry KYC checks on individual investors… it provides transparency and is also a sign that the ICO is willing to work towards regulatory requirements.  This will put mind at rest when it comes to trading coins and interacting with other companies both in the crypto space and not.  QGEN is on the forefront in the crypto sector and is constantly investing in R&D to improve its array of offerings in this fast-paced sector to help ICOs avoid financial crime’.

KYC can be definitely seen as a protection layer for both ICO companies and their clients alike.  Email us today on: info@qgengroup.com or chat with one of our online agents.