Our Strategy For KYC
An approach that works for all
The legal structure underpinning crypto is currently very opaque. The pace of technological development in the space is fast eclipsing the rate at which regulators are able to issue transparent documentation on what early-crypto founders should be doing.
Clear regulation is often sparse when nascent technologies experience product-market fit. This was the case when Amazon first started selling digital goods such as e-books, it was the case when Airbnb started gaining traction with their short-term lets, and it is the case now as Uber is attempting to redefine freelance work. KYC is a hot topic in the launchpad space, and there are lots of differing opinions as to what its best practice should be. In this article, we will outline the general approach Lithium will be taking regarding KYC. This article is the first in our KYC series. The next article will outlay the first version of KYC on our platform, which leads us nicely into the first section of our article
Will Lithium Be KYC’ing Investors?
The short answer is, YES. We’ve decided that we will give projects the option to require KYC from investors. Thus, for certain projects on the Lithium platform, you may have to KYC. Here’s why we think this is the correct approach.
You Would Have to Do KYC Anyway
KYC requirements aren’t set by Lithium — they are set by our launchpad projects. Each project that we launch has its own legal team, guidelines, and process for carrying out its IDO, and most of these projects require KYC at some point. While most projects do not mind whether this happens at the point of claiming of tokens or at the point of investing, we believe there is a clear user experience improvement of having KYC done at the point of investment. At Lithium, we are aiming to move as many possible aspects as possible in-house — from investing to claiming, and our KYC strategy fits into that.
Aligns with Staking V2.0
KYC holds a significant benefit, as it only allows one wallet to be associated with an ID. We will be releasing more guidelines on exactly how this will work in practice. For staking V2.0, KYC provides significant benefits for larger bag holders, making the incentives even more aligned to avoid wallet splitting.
Will Allow Institutional Money into Lithium
For some investors, our lack of platform KYC is a red flag. By bringing KYC into the fold, we are increasing legitimacy across the board, and therefore increasing our chances of bringing in larger, institutional investors. This is important as we seek to diversify our treasury from purely $EBSC holdings into a mixture of stablecoins that are generated through selling tokens that are vested over a long time horizon.
Our strategy is multi-phased and will involve working with our incubated portfolio company, CryptoID. You can read more about CryptoID here, and we’ll be going through their solution (and all the legal elements you’ll need to be aware of) in future articles.
Phase 1 (currently ongoing)
Phase 1 involves the initial beta testing of the CrypotID platform. Our mods will be taking a look at the platform and ironing out the kinks. For Phase 1, Initially, our KYC procedure will only be supported in Metamask.
In Phase 2 we’ll be opening up CryptoID, our KYC solution to investors. You will be able to click through to CryptoID on the site and complete your verification. At this stage we will not be linking projects to KYC, we will simply be letting investors perform KYC in order to prepare for when we do roll it out fully. We will also be using this phase to gather extensive user feedback on the solution. At this stage there will be no status on the Lithium website as to the result of your check; that will all be present on the CryptoID site.
In this phase, we will be fully integrating the results of the CryptoID check with our front-end. You will be required to complete KYC to take part in certain projects, and you will have clearly demonstrated the status of your KYC check to you.
Most likely, you have many more questions about KYC on our platform, such as where your data will be held, how safe it is, exactly how it will work and more. We’ll cover all these concerns in future articles. For now, we just wanted to update you on our general approach and the phases we will be rolling out.
Team Lithium x