Cardano might please regulators with KYC-enabled networks, but it may compromise its decentralized ideals.
As indicated by its rising popularity in recent years, Cardano (ADA) is one of the most notable cryptocurrencies available. This alternative coin is frequently polarizing; some people adore it, while others dislike it. Nevertheless, it consistently attracts a lot of media attention.
The popularity of Charles Hoskinson, the ADA’s founder, is due primarily to him. The entrepreneur is also in the news for his controversial remarks on both crypto and non-crypto matters. He recently garnered media attention by participating in a Twitter discussion regarding whether or not to include the Know Your Customer (KYC) procedure in the Cardano blockchain’s first layer.
In order to stop money laundering, financing of terrorism, and other illegal activities, KYC is an identity verification procedure used in the financial industry and on the cryptocurrency market. It entails obtaining the client’s name, address, date of birth, occupation, source of income, and other important personal and financial information, as well as identifying documents like a passport or identity card.
It is important to note that Hoskinson has discussed the idea of dependent procedures at least ten times, therefore adding KYC to Cardano is not a new thing in his opinion. One of Ethereum’s (ETH) competitors’ ambitions is to build a network that more people may adopt in their daily lives. The Executive believes the validation practice can be quite beneficial in this regard.
Lead engineer at SundaeSwap Labs Calvin Koepke concurs with Hoskinson and emphasizes the necessity of the procedure for the widespread adoption of ADA. Because Koepke and Hoskinson feel it improves the platform’s security and helps guarantee that transactions are lawful, they believe a cryptocurrency with KYC can be an asset that attracts regulators in a favourable way.
But would that be beneficial?
It would undoubtedly please regulators, but it might get in the way of Cardano’s decentralized concept. Censorship may affect a network with a KYC procedure. The Ethereum network is a great example for us even though it does not follow this method.
This is because the Office of Foreign Assets Control (OFAC), a division of the U.S. Treasury Department, does not validate transfers that take place on the cryptocurrency blockchain and are not compliant with its rules.
If KYC is allowed for Cardano, there is nothing to stop this from also occurring for individuals who might not be involved in unlawful activity but who, for some reason, do not meet the conditions set forth by the authorities to conduct their transactions. As ADA fan Alexander Monad pointed out, the cryptocurrency stops being fully open when KYC is implemented.