As central bank digital currencies get off the drawing board and become a reality, digital KYC will become inevitable.

Slowly, but surely, momentum is building up in central banks around the world to explore and test the concept of a central bank digital currency (CBDC). Developments in the US, Europe, and China show growing interest in replacing physical currency with a digital version. But key mental blocks remain surrounding identity verification or KYC, money-laundering, terrorism financing and privacy considerations in digital currency. Blockchain-based identity solutions such as Maxonrow may be the happy middle path.

Maxonrow: Central banks taking baby steps towards a CBDC?

In January, J Christopher Giancarlo, former Chair of the Commodity Futures Trading Commission (CFTC), along with Charles Giancarlo and Daniel Gorfine, joined hands with Accenture on the digital dollar, or US CBDC project.

Accenture is already working with Sweden’s Riksbank to develop an e-krona CBDC as a pilot project. Riksbank said last week that it had begun testing the e-krona, taking the country a step closer to the creation of the world’s first central bank digital currency (CBDC). The pilot project will simulate how the e-krona functions for payments, deposits, and withdrawals in a digital mode.

On January 21, the central banks of Britain, the Eurozone, Japan, Canada, Sweden, and Switzerland on Tuesday announced a plan to pool thoughts and experiences in the case of issuing digital currencies, amid a growing debate over the future of currency.

Resolve is also gathering to replace the US dollar’s supremacy in the global financial chain. Many countries wish to dethrone the US dollar as the world’s reserve currency.

It appears that a global tilt towards digital currencies is underway.

Digital money and identity – two faces of the same coin

However, central bank-issued digital currencies would need to strike a balance.  The complete anonymity of cryptocurrencies versus the 100% standardized transparency of government-issued digital currency. (TechBullion)

The CBDC needs an appropriate and complementary identity infrastructure.

Central banks need all the advantages and convenience of a blockchain-based CBDC with identity verification. However, it should have built-in controls to ensure the protection of privacy.

There may be a need for a public-private partnership between a central bank and a private blockchain player. Maxonrow has the requisite capabilities in this regard.

What the Maxonrow identity blockchain does

“Maxonrow’ signifies that all information data can be digitalized, tokenized, reconstructed, and verified by blockchain technology to maximize data value— ‘Max’, ‘On’, and ‘Row,’” says the Maxonrow website.

“Using existing KYC standards, Maxonrow builds users’ digital identity that serves to establish a decentralized and secure real–identity–based public chain that is adaptive and regulated, allowing enterprises to seamlessly create regulated applications that facilitate users easy and instant access to their regulated services.”

Maxonrow’s private blockchain identity solution can be the identity infrastructure required to underpin a CBDC. A person whose identity is resident on this blockchain can safely transact the CBDC. They can do so without splashing their personal details online. However, the authorities can get full details from Maxonrow in the event this person indulges in any illegal activity.

Maxonrow is the sole main chain service provider in the world to offer real-name identity verification for KYC process and AML safety measures.

Related Story:  Digital Assets: The ESCB has Proof-of-Concept of Anonymous Digital Currency