Digix DAO (DGD) Partners With Traceto ICO as its KYC Service Provider

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Digix DAO (DGD), #28 by market capitalization with a total market cap of $500 million has partnered with Traceto.io as the KYC service provider for the Digix marketplace. KYC, or Know Your Customer is the process of verifying the identities of clients and investors. It is part of the Anti-Money Laundering (AML) regulations that govern transactions at financial institutions and wherever financial instruments, securities and cryptocurrencies are traded for fiat currency.

Digix has a mission to tokenize assets, and is in the process of distributing Digix gold (DGX) tokens, backed by gold cast bars, where each token will be backed by 1 gram of gold, stored in a vault in Singapore. According to the announcement, Digix has a Proof of Provenance (PoP) protocol that ensures the legitimacy of the physical assets.

Many countries, including the United States have strong AML and KYC compliance requirements, and a company that deals in gold-backed securities in the form of tokenized assets would no doubt require such technology to operate legally in these areas of the world. Traceto is a decentralized KYC solution that uses smart contracts and artificial intelligence (AI) to validate user identities.

Traceto sees KYC, AML and CTF (Counter Terrorism Financing) as important issues that have had inconsistent levels of adoption among cryptocurrencies. According to their white paper, the lack of adoption is due to a false assumption that anonymity is more important than compliance with AML and CTF regulations. This is highly debatable, as privacy could be considered an inalienable right. Yet, in a world where governments make the rules, failure to comply, whether subjectively right or wrong, would result in punishing actions against the organization in question.

Traceto also bases their solution on the assumption that companies set a low priority for compliance due to its perception as being a cost center. They also suggest that a lack of budget and compliance expertise are also part of the problem they are trying to solve.

Traceto seeks to solve this problem by determining the answers to four questions: who are you, who are you not, what did you do, and are you still who you say you are? In a typical scenario, a user who wants to participate in an ICO or who wants to buy coins on an exchange is redirected to the traceto.io dApp. After the user uploads their documents, the system encrypts and stores them, and the profile is shared via the KYC provider and AI algorithms.

Traceto is correct in assuming that KYC services are in high demand. As government agencies clamp down on the cryptocurrency industry while also attempting to stop terrorism, money laundering and crime through the use of regulations, companies will struggle to be compliant. Using a KYC service, rather than building custom systems, companies may save substantial time, and the up front costs for development. In addition, as Traceto has built their business model around KYC, they would likely be more effective at keeping their software compliant with new regulations than companies that see compliance as an afterthought.


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