Some time before, ICO or Initial coin offerings were open to everybody. However, due to its gaining popularity, entering ICOs became difficult. In the lieu of the regulations from the SEC, cryptocurrency startups were mandated to require more information from their investors.


Are KYC requirements safe?

With a vast number of cyber criminals creeping the internet, KYC requirements will do more harm than good for a huge group of investors.

In 2017, The U.S. SEC hunted down a number or ICOs for not satisfying legal requirements from their investors. ICOs have taken things a notch higher, using KYC protocol. This procedure intends to filter out investors form U.S. China and other countries. In 2018, all major crowd sales have obligated procedures similar to KYC to gain whitelist entry.

There are a couple of requirements to be considered for a token sale, such as passport scans, bank statements and other documents to prove their identity as well as answering a set of questions about the background and origin of their cryptocurrency. Legolas required that investors should provide a detailed origin of BTC.


Data Leaks

Most ICOs now have access to identification documents and passports of their cryptocurrency investors all tied together with their email and even their wallet addresses. This is a manifestation of a crow’s attraction to shiny objects. Having these data available for potential hackers is an obvious risk for investors.


Pros and Cons

While the KYC protocol is a good thing for ICOs, it is on the other end of the spectrum for investors. There isn’t a rough estimate on the success rate for ICO whitelist applicants.

Approval for investors to participate in pre and public sales is being treated like a game. However, the cost of being admitted equates to the time that will be rendered to complete the KYC process.