The Importance of Compliance in Ensuring Data Security in Blockchain-Powered Enterprises
When the limitless possibilities afforded by blockchain technology was discovered by people, many entrepreneurs and developers set about to use this revolutionary technology to create platforms that wold solve real world problems. However, in a system that relies on personal data, the problems of data security arise. And this introduces the need for compliances laid down by relevant authorities.
KYC/AML Compliances to Ensure ‘A Clean Platform’
The most basic compliance that is required by any blockchain-powered enterprise that distributes tokens is the KYC/AML. KYC, also better known as “Know Your Customer” has gained importance in recent times in the financial sector owing to the large number of fraud accounts that people create in a bid to launder money or for other illegal purposes. Today, even blockchain enterprises need to perform stringent KYC procedures that establishes, beyond any doubt, the identity and authenticity of an individual. AML compliances are also necessary to establish that all measures have been taken to discourage money laundering and the enterprise follows all guidelines laid down by governmental authorities to stop cryptocurrencies from being used by their customers to launder money or for illegal activities, like financing of terrorist activities (CFT — countering the financing of terrorism).
Coinnup is creating an alternative financial ecosystem that will be powered by cryptocurrency. It will provide services that incorporate the entire crypto lifecycle — from buying cryptocurrencies of choice, to exchanging them to trading them and using them for daily transactions by individuals as well as large institutions and corporations. A payments system for B2B transactions that is powered by cryptocurrencies has to be compliant with regulations because it runs the risk of being used as a money laundering gateway. The vast amount of personal data on a B2C payment gateway is prone to be hacked and stolen. Cases of identity thefts can occur if proper measures are not incorporated.
To provide data security, Coinnup is using state of the art technology to ensure an extremely high level of security. It also incorporates the mandatory regulations for KYC and AML that will allow screening and tracking of transactions to ensure that they occur only for the explicit reason that the platform allows them to. Coinnup will use bank-level encryption protocols that will protect holdings and transactions. We are also partnering with industry leaders to create multi-sig wallets that will ensure a high degree of security. Spread-based wallet solutions are being created to ensure that all the assets are not based on one location or accessible by one individual. This will be achieved by adding extra wallets secured by private network system controlled by a multi-layer firewall. Multiple wallets will be stored across multiple locations with the ability to process the transactions in sync and provide uninterrupted transaction flow despite any hardware failure.
Regulation is central to adoption. Any blockchain enterprise comes to naught if it does not address the basics of identity (KYC) and analytics (AML). It is not just a way to comply with mandatory regulations but encompasses a broader vision of the blockchain community to keep the system clean and allow for a truly decentralised system to function without the perils of illegal activities done by unscrupulous entities.
While the authorities are doing a splendid job in trying to regulate blockchain-powered enterprises, the onus is really on the platform developers themselves to provide voluntary compliances to ensure data security and to avoid cases of frauds that plague the traditional financial system. Also, the regulatory authorities need to strike the perfect balance between too much regulation and the risk of inhibiting innovations.
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