How KYC verification can prevent crypto fraud

Digital assets - cryptocurrency, NFTs, gaming tokens- have seen a meteoric rise in India ever since the Reserve Bank of India overturned the ban in 2020. A digital asset is anything stored digitally and uniquely identifiable that organizations can use to realize value.

India today holds a $1.1 trillion digital asset opportunity by 2032 and its value to the country's GDP will grow at 43.1 per cent CAGR over the next decade. Most of this boom can be attributed to the growing interest of youth, particularly those between the ages of 18 and 35 in digital assets.

However, a question that has always riddled investors and the government alike is the rampant frauds in digital assets. India's nascent but growing digital assets market is slowly turning into a target for advanced cybercrimes. Lack of or no minimal KYC checks in some instances have hackers stealing digital assets and selling them via platforms to investors. The lack of proper checks leaves very little information to trace the hackers' identity. As the market, and the country, evolves to imbibe digital assets to mainstream platforms, it is crucial to building a system that supports robust KYC.

Deploying a single KYC API can prevent crypto fraud to a greater extent as it will enable the exchanges, platforms, and organizations to trace and track the investments done through their platforms. Some leading exchanges in the country have already implemented the mechanism and more could follow suit to make digital assets trading and exchange safe and secure.

Talking to Biz Buzz, Rohit Taneja, Founder & CEO, Decentro said, "Platforms like Decentro help cater a robust KYC process to any digital assets organization. With a single KYC API, these platforms can now run multiple checks and extract the authentic background details from the respective national databases via Aadhaar, PAN, Digilocker, and more. The plug-and-play APIs can also help with pre-deposit checks, ensuring that users are transferring funds only from registered and authentic bank accounts."

Digital assets organisations today require a robust payments stack to facilitate instant, simple payments for their customers that help save on collection costs and reconciliation processes. A real-time reconciliation process can also be set up using virtual accounts of platforms like Decentro to track all transactions, even failed ones, he said.

Enforcing KYC compliance, he went on, will not only prevent malicious activity, but also protect consumer privacy. More vital crypto compliance, consisting of a robust identification procedure could help digital assets platforms and organizations protect consumer interest and further the growth of the economy.