Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) have gained global popularity due to their decentralized nature, offering transparency, privacy, and peer-to-peer transactions. However, challenges such as lack of regulation, irreversible transactions, and risks like fraud and money laundering persist.
The 2022 collapse of FTX, the world’s second-largest crypto exchange, highlighted these vulnerabilities, prompting stricter regulatory measures. For instance, Taiwan’s Financial Supervisory Commission (FSC) now mandates Know Your Customer (KYC) and electronic KYC (eKYC) protocols for virtual asset service providers (VASPs) to ensure transaction security and user accountability.
Understanding Cryptocurrencies
Cryptocurrencies (or virtual currencies) are digital assets secured by cryptography, enabling secure transactions on blockchain networks. Key characteristics:
- Decentralization: No central authority controls transactions.
- Transparency: All transactions are recorded on public ledgers.
- Global accessibility: Tradable across borders without intermediaries.
Cryptocurrency Trading Methods and Fraud Risks
In Taiwan, primary trading avenues include:
- Exchanges: Platforms like BitoPro and MaiCoin require KYC verification for trading.
- OTC Markets: Peer-to-peer trades with higher fraud risks (e.g., fake accounts, deepfake scams).
Common Scams:
- Identity theft via forged documents or AI-generated deepfakes.
- Unregulated OTC trades leading to money laundering.
👉 Learn how eKYC combats crypto fraud
KYC vs. eKYC: Key Differences
- KYC (Know Your Customer): Traditional identity verification via physical documents (e.g., IDs, proof of address).
- eKYC: Digital verification using AI-driven tools (e.g., facial recognition, OCR) for remote onboarding.
Advantages of eKYC:
- Faster processing (e.g., reduces verification from 10 days to <24 hours).
- Enhanced accuracy with AI-powered fraud detection.
- Compliance with anti-money laundering (AML) regulations.
Why Cryptocurrency Exchanges Need eKYC
Taiwan’s FSC requires VASPs to verify identities for:
- Account registration.
- Transactions exceeding NT$30,000 (≈$1,000).
- Suspicious activity monitoring.
Case Study: BitoEX (a Taiwanese exchange) integrated FaceMe eKYC to streamline onboarding:
AI-Powered Features:
- ID forgery detection.
- Liveness checks (iBeta PAD Level 2 certified).
- 1:1 face-ID matching (99.83% accuracy, per NIST benchmarks).
- OCR auto-fill for document data.
Results:
- Registration time cut from 10+ days to <1 day.
- Reduced manual errors and operational costs.
FaceMe eKYC: A Comprehensive Solution
FaceMe eKYC offers modular identity verification for:
- Crypto exchanges.
- Banking/financial services.
- Custom workflows (e.g., dual-ID verification for leasing sectors).
Key Features:
- Real-time liveness detection.
- Support for Taiwan ID cards, passports, and driver’s licenses.
👉 Explore FaceMe eKYC integration
FAQs
Q1: How does eKYC prevent deepfake scams?
A: AI liveness tests (e.g., facial movement analysis) distinguish real users from synthetic media.
Q2: Is eKYC legally recognized in Taiwan?
A: Yes, it complies with FSC’s AML/CFT regulations for VASPs.
Q3: What’s the average eKYC processing time?
A: Typically under 5 minutes for automated systems.
Q4: Can eKYC replace physical KYC entirely?
A: For most digital services, yes—but hybrid checks may apply in high-risk scenarios.