Interview: Dash and Coinfirm on Digital Currency Compliance Partnership
The effective management of regulatory requirements is vital to the continued advancement of the digital currency industry. Dash, a privacy-centric, open-source, digital money ecosystem, has therefore chosen to integrate AML/KYC solutions designed to manage these concerns, in cooperation with blockchain compliance provider Coinfirm.
Some are hailing this move as a key milestone in addressing vulnerabilities tied to fraud and money laundering. Others are more skeptical, viewing it as potentially undermining Dash’s core tenets around privacy.
Dash, viewed by its proponents as an enhanced version of Bitcoin, has garnered a great deal of media attention of late for its decentralized platform that allows digital cash to be spent online at merchants and service providers worldwide. Its features include instant transfers, low fees, and high levels of privacy and security.
As the seventh most valued digital currency, with an $82 million market cap, Dash’s self-funded, independently-governed community is comprised of over 15,000 users that facilitate over a million dollars in transactions every 24 hours. These transactions are verified by users through a global network of over 4000 master nodes.
Dash’s new collaborator, the London-based Coinfirm, is a risk and compliance platform offering compliance services for blockchain-based transactions. The platform employs proprietary algorithms that address AML/CFT, credit risk assessment, and other regulatory requirements pertaining to digital currencies. This gives institutions the ability to properly evaluate clients with speed and agility, ultimately allowing them greater access to new pools of clientele.
The Present Landscape
In the case of digital currencies like Dash, integrating with new product and service delivery models is a challenge. With these regulation requirements varying across such a wide global geography, compliance often becomes a painstaking, complex and costly undertaking.
Coinfirm’s role is to navigate these linkages in a manner that allows Dash to work for the first time with commercial and financial institutions that are already subject to compliance requirements. Besides streamlining the onboarding process for new corporate clients, the Coinfirm platform will manage all ongoing AML monitoring by synchronizing with Dash’s blockchain network. Counterparty verification, risk assessments and fraud management are among the many deliverables that Coinfirm will provide on behalf of Dash.
In addition, Coinfirm will offer reports that allow Dash’s entrepreneur user base the ability to create their own verifiable Dash credit history and rating. As a result, this community will now have control of a faster track for launching new product and service offerings directed toward their strategic customer niche.
According to Coinfirm Co-founder and CEO Pawel Kuskowski, his firm’s partnership with Dash represents a major development in aligning the digital currency space with the larger world of commerce. “We believe that creating the first compliant digital currency ecosystem holds great significance, and will achieve broad acceptance by regulators, financial institutions, entities and individuals,” Kuskowski said to Bitcoin Magazine.
“This collaboration is the result of the immense benefits we can see, not just for our two firms, but for the entire blockchain, cryptocurrency and the financial system as a whole. This will set a standard, benchmark and precedent for the future, demonstrating how digital currencies and privacy can properly coexist, and strike a balance with the prevailing requirements of the financial world.”
Kuskowski believes that regulatory compliance is one of the key hurdles to overcome before the commercial and mass adoption of digital currencies can happen. “We've all seen how media coverage has portrayed some aspects of digital currencies over the years, and how the commercial and financial world has approached it. AML and compliance has been one of the main reasons why the two worlds haven't gelled yet, and is a large roadblock for entities already operating in the space. Our joint effort with Dash is a major move in addressing this.”
New Possibilities for Dash
Speaking with Bitcoin Magazine, Ryan Taylor, Director of Finance at Dash, says that this new collaborative effort with Coinfirm will open up potential opportunities to “expand into products and services that we haven’t been able to provide or integrate in the past. We’re super excited about this because it’s definitely a game changer in terms of what we can do moving forward.”
Taylor notes that nothing will fundamentally change with Dash’s core protocol, product and privacy elements as a result of this partnership. What this move addresses, he says, are efforts to build mass adoption through the addition of new products and services through various business partnerships.
Says Taylor: “I think there was a lot of early, negative reaction to all of this from both in and outside of our community — because the perception was that Dash was somehow being regulated. That’s not the case, however. We are simply seeking to greatly expand the number of businesses that integrate with Dash, most of whom already have to meet AML and KYC compliance requirements.
“Personally, I’ve already spent quite a bit of time on our public Slack channel yesterday answering questions and addressing what I see are knee-jerk reactions. A lot of users reacted very negatively to the media headlines without understanding the limits and full implications of what it is that we’re doing. I listened and once 95 percent of the users had their questions answered, they were much more comfortable with the direction we’re headed.”
Taylor says that a user is affected only if they start interacting with a regulated businesses that Dash is partnered with. He offers this clarifying example: “So if I receive bitcoin from someone else and then exchange those funds for Dash, I, as a user, would be unaffected. But if I wanted to buy or sell Dash directly on a site like Coinbase, I would have to go through Coinbase’s compliance requirements. This is true for any exchange or money transmitter that wants to provide a similar buy/sell option.”
Compliance isn’t the only issue that Dash has been dealing with lately. Another is the recent decision by Apple to ban Dash from its app store.
“We are very disappointed that Apple has chosen to filter certain currencies — including Dash at present,” said Taylor. “Apple is not highly transparent about the reasons why certain currencies are approved or not approved. That’s been frustrating for many of us in the cryptocurrency community. It makes it hard to figure out what exactly we should be working on.
“I think, though, that Apple is dealing with a rather difficult problem, as they have faced a lot of fraudulent wallets that have made their way into their app store, resulting in the loss of consumer funds. Apple is first and foremost interested in protecting consumers from this type of fraud. They also receive a ton of new wallet approval requests. So I think they’re struggling a bit to get their arms around this evolving ecosystem. My wish is that they would engage with the community more as a whole, and would communicate more clearly what the requirements are and what they evaluate when it comes to both currencies and wallets.”
At the end of the day, Taylor says that this compliance partnership with Coinfirm is ultimately about improving the overall ecosystem for Dash users. “We’re excited to work with Coinfirm because it really does open up a large number of doors for us in terms of opportunities to build our ecosystem. I think that firms in the digital currency space will be much more willing to work with Dash and consider us an option as a result of this. And what’s particularly exciting is, we can achieve this, while at the same time preserving all of the privacy features that make Dash so very compelling for the consumer.”