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Comment by yawaworht1978 | Hacker News Reader

yawaworht1978

Oh my, they cal KYC "friction", that is indeed creative writing.

I've both implemented, and been impacted by, KYC workflows. It is definitely friction. "Required by law," sure. "Prevents money laundering," on occasion. But friction, most definitely.

How is it not friction?

It's a law that requires financial institutions to "Know Their Customer" in order to operate legally. It's a reasonable law. Following existing regulations will be needed for crypto to have a chance at being mainstream

Or arguably, it's burdening 99% of legitimate users to stop the 1% of bad actors.

Yep. It's burdening 99% of legitimate users with a very minor inconvenience, to stop the 1% of bad actors who would otherwise end up doing a lot of really bad things that would harm the 99% in ways that go far outside the scope we think of as covered by the financial system.

So yes, I understand where you're coming from, but my libertarian instincts to reflexively think of KYC/AML as excessive and annoying regulation and untrammeled exchange as a good thing, turn out on closer examination to be simply wrong.

I'm not sure I would categorize it as "minor inconvenience". In terms of financial numbers, it's estimated to cost 180B$ [1]. You also have to consider all the opportunity costs of what we could achieve with a faster and smoother financial system. And you have to consider financial inclusion and all that, there are lots of really interesting financial instruments that I can't access because there's some retail that doesn't understand exactly how it works and because we lower regulations to lowest common denominator, let's just ban it. We are also cutoff from these exchanges like Binance which have much more liquidity, more interesting products, etc.

And I'm not sure that it's all that effective, especially after seeing HSBC launder money for cartels and get away with it [2]. Oh and none of these regulations obviously stopped 2008 or any of the previous crises.

To me a lot of these regulations seem like the TSA security theatre, seems useful, but at this point, pretty outdated and inefficient.

1: https://www.cpomagazine.com/cyber-security/global-cost-of-fi...

2: https://www.investopedia.com/stock-analysis/2013/investing-n...

Agreed that this isn't just a "minor inconvenience" and as a resident alien in another country for a while (the UK), I found KYC regulations to be really quite obnoxious — and I was a pretty good position to handle them, at that.

The question of whether it's worth it is a real one, and more honestly answered (whether positive or negative) if we admit these substantial costs.

Okay, fair enough, maybe 'very minor inconvenience' is understating it. And granted that the safeguards are not perfect, and some financial crime does get through. I still think the current state of affairs is a big improvement on what we would have if we just threw out the regulations.

I can withdraw 1000$ daily up to 10.000 per year (or device/IP rather) without KYC.

I am not sure if the burden is worth it, when living in the right country makes cashing out without KYC kinda easy?

Sure no way to pull out millions, but I would argue most bad actors are rather on a 10k level.

How is it a reasonable law? It's an invasion of privacy that ties every book you buy on Amazon to your government ID.

People argue that voter ID is an unreasonable burden on vulnerable populations. If that's the case then how is it a reasonable burden for interacting with the financial system?

If cryptocurrency does anything useful at all it will be to make privacy invasions like that sufficiently toothless that the case can be made to eliminate them in the ordinary financial system as well. Arguably it already has and all that's left is to eliminate the pointless KYC requirements.

It’s not reasonable. The government should not be snooping into people’s financial accounts anymore than they should be snooping into people’s private homes or email inbox.

It astounds me how even principled civil libertarians wholesale accept an Orwellian level of surveillance on anything related to money. The Founding Fathers would have all revolted at anything even resembling modern KYC/AML law.

KYC does not give the gov't your transaction history, it simply means that your financial institution needs to verify your identity. It is part of an overall strategy to reduce the amount of damage malevolent actors can create.

You might try reading the Federalist Papers before making claims about the founding fathers. Again, it is not surveillance by government anyhow.

Reasonable doesn't mean it doesn't add friction btw

An OS asking you to confirm that you want to delete a file is also friction. Like KYC, it is a positive, but friction nonetheless.

In context, they also mention traditional markets being closed at certain days and times. This is also friction, but negative.

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