Cryptocurrencies have been making headlines for years. Bitcoin, the largest virtual currency by market cap, rose to prominence in 2017, and seems poised for more traction in the future. However, since its initial peak, Bitcoin and many other cryptocurrencies have also experienced immense volatility and actually lost much of their value at times, as crypto adopters and speculators found them difficult to use as payment and maintain stable values.
That said, PayPal announced last week that it will allow its users to hold in their accounts and shop using cryptocurrencies across their network of 26 million merchants. This is big news for cryptocurrencies, as it signals to legitimize them as a mainstream payment method, potentially further increasing consumer adoption — at least that is what PayPal is banking on. In addition, PayPal mentioned that they plan on expanding crypto services within their Venmo app, a peer-to-peer and merchant payment application, further expanding adoption and crypto applications. In an update since this was first announced, PayPal has already seen a strong appetite for crypto adoption, so much so that they already plan on increasing weekly crypto purchase limits to $15,000.
While innovative companies such as Square and Robinhood have been allowing for investment in cryptocurrencies on their platforms for some time, PayPal’s user base is a game-changer and could scale crypto to over 346 million users while propagating digital currencies across internet-based commerce. This is exciting news for cryptocurrencies and their enthusiasts, as it makes it much easier to spend or liquidate their digital currency for goods and services. However, it’s not all clear blue skies. It’s worth noting that prior to its rise in popularity, cryptocurrencies were mainly used for the purchase of illegal goods and services, such as illegal narcotics and off-shore gambling. Its inherent characteristics, including being nearly untraceable, make it a favorite for gray and black-market dealings.
A resurgence in popularity, in addition to the new, convenient infrastructure for transacting with cryptocurrencies, opens the door to illegal money-laundering operations that used to rely on other avenues due to crypto’s historical lack of liquidity. Without the right identity verification and AML solutions, these technology companies are potentially opening themselves up to be exploited by the ill-intentioned in their search for new customer acquisition and growth.
Governments across the globe are keeping a close eye on these new developments, with the United States Department of Justice already cracking down on BitMex, a crypto trading platform for violating the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations. PayPal’s CEO, Daniel Schulman, has mentioned that crypto is an opportunity to “work hand-in-hand with regulators”. While cryptocurrencies used to operate in blind spots and dark corners of the internet, they have quickly become more mainstream investment vehicles and currencies which are clearly subject to regulations and enforcement such as Know Your Customer (KYC) and AML.
The Socure Solution
PayPal, Square, Robinhood, and other companies likely to see a continued rise in new account sign-ups and crypto transactions need an identity verification partner that makes sure these companies can identify and auto-approve consumers at the highest rates in the industry, while safeguarding reputation and compliance. Luckily, they can pull from the playbooks used in the past by other top fintechs that have partnered with Socure.
Socure’s holistic suite of compliance and fraud risk solutions helps businesses answer critical questions like, “does this person exist?” and “can I do business with this person?”— all via frictionless technology that achieves up to 92% auto-approval rates, including for hard-to-identify, thin-file consumers in the critical 18-25 year old demographic.
Our KYC solution combines advanced logic and clustering with diverse data sets to achieve the highest match rates and accuracy in the industry, while providing detailed risk and reason codes as actionable insights. We leverage over 5 billion data records from credit, utility, telecom, SSA eCBSV, and NIST 800-63 files to maintain a database of more than 250 million verified individuals, as well as a premium global watchlist utilizing over 1,100 sanctions and enforcement lists and more than 6,600 PEP and Adverse Media registers.
Anthony is VP and Head of Product Marketing at Socure. Previously, he was at Raise, the world's largest marketplace for retail currency. Prior to that, Anthony was a co-founder at Slide, a gift card wallet app on iOS and Android, that was acquired by Raise in 2016. Before becoming an entrepreneur, Anthony worked in business and product development at American Express.
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