Crypto pushes identity beyond KYC and into the transaction

It’s getting harder to know your customer. The AI era has been seismic for traditional KYC processes, which have proven themselves unable to stand up to the force. Automation and agentic activity have run harder into some industries than others, with crypto firms reporting some of the highest rates of automated activity among users undergoing identity verification.

Providers are responding with reusable identity solutions that aim to limit friction while plugging holes in security architecture.

Regula report highlights importance of traceability

A new report from Regula Forensics shows that crypto firms have higher rates of AI-assisted or automated activity for customers performing identity verification. According to the Crypto KYC Snapshot Report, whereas only 31 percent of respondents in other sectors confirmed AI automation, the number among surveyed crypto firms rises to 44 percent.

In a release, Henry Patishman, executive vice president of identity verification solutions at Regula, notes that the use of AI or automation by someone undergoing identity verification does not, in itself, indicate fraud. “An AI agent may be acting legitimately on behalf of a customer. However, automation can also be used to scale attacks or manipulate the verification process.”