Wietse Wind, the founder of Ripple-backed XRPL Labs, says he’s working on a solution to help crypto ventures in Europe deal with regulatory compliance.
In a blog post, Wind says that although he’s a supporter of regulating crypto, he’s concerned about how upcoming European and Dutch laws could impact digital asset innovation.
The Dutch central bank announced in September that it would begin regulating crypto firms on January 10.
Wind notes that these new regulations – like many that are already in place in other European Union countries – will require registration, supervision, audits, and regular collection of know-your-customer (KYC) information, as well as reporting suspicious transactions to Dutch authorities.
Says the XRP developer,
“This makes perfect sense to me, and I am sure regulation is a good thing to a growing and maturing ecosystem, making its way to more and more use cases and users. However: think about all those new and innovative use cases. Think about micropayments. Think about streaming payments, the internet of value.
Now imagine all small teams of developers, crypto enthusiasts, innovators having to get contracts with KYC providers, [Anti-money laundering] data providers, defining risk profiles, scanning transactions, AML related interactions with customers… Think about the costs involved in starting even the smallest crypto project.”
Wind’s solution is to create a “crypto regulatory compliance company” to handle all of those tasks for crypto ventures, large and small.
He says he’s already gathered a small team of innovators, developers and consultants, and that the venture will focus on providing services for EU regulations first.
The idea, he explains, is for crypto platforms and apps to forward their end users to his new business.
“Once onboarded, the customer will be redirected back to the crypto platform/app with a token, granting the crypto platform/app to use our API to pre-authorize transactions, check for customer account status, customer limits, etc. AML / risk profile related questions will even be interaction between ‘the company’ and the customer.
The one account with ‘the company’ can be used to access all connected platforms/apps, sending just a minimal amount of personal information to the platform/app.
(You are probably familiar with flows like the one I just mentioning: ever authorized an app to use ‘Sign in with [ Facebook / Google / Twitter / …]’? Well: it’s like that, but applied to crypto, KYC, AML, etc.)”
So far, Wind says the venture is in its early stages. The next step is to analyze the project’s viability from a legal and regulatory perspective.