The cryptocurrency and allied technology space have faced a seemingly rising trend of regulatory hurdles that have somewhat slowed down their adoption. One of those regulatory components is the “Know-Your-Customer (KYC)” procedure required for access to financial products.
Spring Labs has created Kyox, a digital identity product for blockchains. It can change the game as onboarding new clients into blockchain ecosystems would now become a breeze.
We reached out to John Sun who is the CEO at Spring Labs for more answers. Here is what he had to say.
John Sun CEO at Spring Labs
E-Crypto News:
What are the various regulatory hurdles that the cryptocurrency and decentralized
finance (DeFi) space face?
The DeFi space is still the Wild West today.
Very little of this space is subject to regulatory scrutiny, which in turn makes it difficult for institutions to meet the expectations of regulatory agencies.
The biggest issue in regulators’ minds are the current risks and lack of tools in place for anti-money laundering (AML) , know your customer (KYC), and fraud prevention.
While regulation often has a negative connotation in the DeFi space, at the end of the day, regulators aim to minimize the risks involved for all those participating.
Related:Will Decentralized Finance (DeFi) Take over the World?
E-Crypto News:
How has blockchain technology improved regulatory processes when it comes to compliance?
Transactions are publicly auditable and immutable.
E-Crypto News:
What is Spring Lab’s Ky0x Service?
A Suite of KYC Tools Built For Blockchain Applications.
Ky0x provides blockchain companies with a set of essential data vendors, integrations, and policies to aid in launching your DeFi or NFT application.
All of these benefits can be integrated with less than 10 lines of code.
E-Crypto News:
What are the benefits of Spring Labs’ Ky0x?
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AML / KYC data can be shared by all blockchain applications.
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Any type of data can be shared.
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Sensitive information is never revealed to connected blockchain applications.
E-Crypto News:
How is Ky0x a win-win for all parties within the cryptocurrency space?
Removes the need for every blockchain application to complete expensive and high-friction KYC processes.
E-Crypto News:
What are the features of Ky0x?
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Identity and KYC for the crypto space
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Bringing off-chain reputation data (e.g. a credit score) on-chain to support better lending products than what’s currently available in DeFi.
E-Crypto News:
How does Ky0x help in unsecured credit?
Unsecured credit relies entirely on the trust/reputation of the borrower.
While not possible today, we hope to make this possible in the future by bringing this reputation to the ecosystem from both off-chain and on-chain data.
E-Crypto News:
How is investor/consumer privacy assured within the Ky0x ecosystem?
Ky0x’s tokenization mechanisms ensure that the identity of a wallet’s owner remains obfuscated while still showing that this individual or business has undergone KYC/KYB.
E-Crypto News:
How does the introduction of Ky0x help improve the mass adoption of cryptocurrencies and their allied technologies?
Large institutions today can’t gain exposure to DeFi yields due to regulatory requirements for BSA, AML, and KYC. By providing tools for KYC/AML compliance in DeFi, Ky0x helps enable institutional participation, bringing significantly more liquidity to the space.
Related:What Does Crypto Regulation Hold for Privacy Coins?
E-Crypto News:
Can you tell us more about your partnership with TransUnion?
TransUnion led our Series B round this summer as a strategic investor as they share our mission of enabling better access to data with a focus on improving security and privacy.
As a core part of our strategy to expand, TU is supporting our growth in two key ways: channel sales for our existing network products to bolster our market presence, and helping us scale rapidly with an audience of established financial institutions for Ky0x.
E-Crypto News:
What is digital credit?
We think of digital credit as a reflection of reputation on-chain. The better your digital credit, the better financial products and rates you get access to. Similar to a credit score.
E-Crypto News:
How does Ky0x improve digital credit?
Ky0x provides the tools to gather the data a wallet needs to show its legitimacy and reputation. DeFi apps can then determine preferential rates/products for higher reputation scores.
E-Crypto News:
What are identity passports?
The Ky0x identity passport allows users to provide information about themselves in order to access permissioned smart contract applications while preserving the privacy of their off-chain identity.
Over time, more data gets added to the passport by the user or third parties, creating the basis for on-chain reputation.
E-Crypto News:
How do identity passports work within the Ky0x ecosystem?
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Trusted third parties (issuers) can verify a customer’s identity and issue a Ky0x identity passport through our smart contract application.
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Permissioned smart contract applications can request specific pieces of information from a wallet holder through their Ky0x passport.
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We’re starting with KYC and identity, but quickly expanding into other useful off-chain data such as credit scores.
Related:Sri Lanka names firms to work on blockchain KYC system
E-Crypto News:
How is the DeFi space growing? Please, can you tell us more about the growth potential of the DeFi space?
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The DeFi space often uses the ‘Total Value Locked’ (TVL) metric, which corresponds to the dollar amount held in DeFi.
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Exactly a year ago there was already $20bn, and we are now over $100bn. And this excludes institutional investors, who can bring the TVL comfortably in the trillions.
E-Crypto News:
What are the practical use-cases of Ky0x?
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As a borrower in DeFi you can show your reputation and get better rates through DeFi lenders that accept the Ky0x passport.
Example: you want to borrow ETH and use BTC as collateral. With Ky0x you won’t need to provide >3x the collateral in BTC (a common ratio) as you have proven you are a good borrower. In turn this means you can borrow more ETH for the same amount of BTC left in collateral.
E-Crypto News:
What was the inspiration for Ky0x’s creation? (What are institutions missing out on?)
Spring Labs started as an enterprise blockchain company focused on creating private and secure data exchanges for large financial institutions using advanced cryptography.
While creating privacy focused products and exchanges, Spring Labs identified tools that would solve rising problems for DeFi created by regulatory uncertainty and built a bridge to allow for regulatory oversight while maintaining user’s privacy.
We see these tools as the most impactful way to improve adoption of DeFi, driving it into mainstream while using our existing technology and data assets to fill in the regulatory gaps.
The founders have extensive experience developing innovative off-chain lending platforms such as Avant, Amount, and Future Finance and are excited by the opportunity to help bring diverse product sets to the DeFi industry.
E-Crypto News:
Do you have any plans for overseas expansion? Please, can you tell us about this?
Our focus is on the US today, but we are not limiting ourselves geographically.
E-Crypto News:
What are your thoughts on incoming regulations concerning the use of cryptocurrencies and their allied technologies within the jurisdiction of the United States of America?
Done right, regulation can be a huge boom for the ecosystem by providing a safe way for individuals and companies to benefit from the technological advancements brought by crypto.
Related: US Treasury Dept. Insist Crypto Regulation Is Critical For Sector To Go Mainstream
