Earlier this week, Coinstar and Coinme announced a partnership to allow Americans turn spare change into Bitcoin at its machines dotted around the country. However, just a few days into the groundbreaking project, users are complaining on mass. It appears as if many users are irked by the heavy duty know your customer (KYC) and anti-money laundering (AML) checks that have been put in place. Complaints started flooding in on Twitter and Reddit after buying a measly $25 worth of Bitcoin with spare change took a lot more hassle than expected.
— BitBuyBit (@ACU_5BTC) January 21, 2019
KYC and AML Overkill
In order to get the voucher that can then be used to redeem Bitcoin on the Coinme app, users need to go through the same KYC and AML checks that they would on any regulated US-based crypto exchange. Unfortunately, this isn’t something the company chose to implement freely – it’s a byproduct of the US Securities and Exchange Commission’s (SEC) incessant need to control the crypto world. Before users can turn their coins into Bitcoin, they need to provide an email address, ID number, selfie, name, and phone number – quite a lot to ask for if it’s only a bit of spare change. Once you make an account, you only really need to provide your phone number from then on, but that hasn’t stopped the complaints from flooding in.
KYC Posing a Risk to Consumer Safety
A lot of people just presume that by using KYC, their details will be stored safely. However, this KYC documentation is kept on traditional servers, and these can be hacked with relative ease. There is a new school of thought that these intense and rigorous KYC processes used in the crypto world could end up causing more issues for crypto holders down the line. If their data gets leaked, a lot more sensitive material is at stake compared to a regular bank hack. This is due to the fact hackers would have enough information to potentially steal all of your crypto by posing as you. Banks still have certain checks in place to prevent this – but in crypto, if you can prove you are you, once the transaction has been made there is no going back.
While this new way to buy Bitcoin is far simpler and intuitive than using a regular Bitcoin ATM – meaning grandma is more likely to get her hands on Bitcoin – it still has a few kinks that could be ironed out to make it a smoother experience. For now, it’s still in its early days, and no doubt as time goes on this service will improve.