The creator of the cryptocurrency Tron (TRX), billionaire businessman Justin Sun, expects a rise in tokenized know-your-customer (KYC) checks as regulatory standards tighten. Sun also disclosed his own identity token, which grants users who successfully pass tier 3 KYC verification on Huobi, an exchange Sun owns a portion of, “citizenship” in Dominica’s metaverse.
In an interview with Decrypt, Sun made a prediction on the potential need of KYC verification for on-chain users by decentralized exchanges (DEXs) like Uniswap in the future. He noted that in order to adhere to travel laws and anti-money laundering (AML) principles, these exchanges could need licenses. To meet these possible needs, Huobi has unveiled the Dominica Metaverse Bound Token (DMBT).
Users who have successfully completed Huobi’s tier 3 KYC verification may access the DMBT token, which is based on the Tron blockchain and gives tokenized identification. Face recognition, biographical data, and photos of a national ID are all used in this verification procedure. The token functions as a government-issued ID for the Commonwealth of Dominica and confers its owners “citizenship” inside the Dominica Metaverse.
Although it has been assumed that Huobi’s adoption of Dominica’s digital government-issued ID is a way to get around the restriction on cryptocurrency trading for users on the Chinese mainland, Sun now sees greater possibilities for the new identity token in the digital economy. He thinks that it may be used by protocols like Compound, Uniswap, and dYdX for their own identifying needs.
Sun noted that decentralized ID satisfies KYC and AML regulations while providing the benefits of decentralization and self-custody of digital assets. Decentralized ID will have many applications, he predicts, adding, “That’s why I think there’s gonna be lots of use cases for decentralized ID.”
The Huobi-facilitated Dominica Metaverse Digital Citizen (DMDC) initiative offers a special response to the changing environment of rules and identity verification. It is unclear how other exchanges and decentralized protocols will react to the growing need for compliance in the digital asset arena, given the development of tokenized KYC checks.