Identity verification on Polymesh takes place during the onboarding process, where users validate their identity through a basic customer due diligence (CDD) process with one of our designated CDD providers.
In what follows, we'll take a more detailed look at the issue of identity on blockchain and how Polymesh overcomes it during onboarding. We'll then introduce you to two CDD providers working to bring identity verification to the chain: Fractal ID and Netki.
For regulated securities, this simply won’t do: securities regulators require participants to validate customer identities through Know-Your-Client (KYC) obligations.
Identity Verification on Blockchain
Most public blockchains were built for pseudonymity and censorship resistance and find it difficult to comply with regulatory requirements like knowing who someone is. For regulated securities, this simply won’t do: securities regulators require participants to validate customer identities through Know-Your-Client (KYC) obligations.
While identity solutions can be added to existing blockchains, they come in the form of layer-2 add-ons, creating additional complexity in the end-to-end solution. Polymesh, on the other hand, is a blockchain built specifically for security tokens and builds identity into the foundation of its solution.
On Polymesh, a user’s on-chain identity can only be tied to one person, and that one person can only have a single identity. This enables participants to more easily satisfy regulatory standards since tokenholders cannot subvert rules by holding assets under multiple identities. It also makes the chain more resilient and less vulnerable to Sybil attacks.
Identity and Onboarding on Polymesh
The most common way financial services providers comply with identification requirements is to have users provide them with personal information as verification, usually in the form of government-issued ID.
With Polymesh, every user onboarded validates their identity through a basic verification of your name, date of birth, and place of residence through a CDD provider. All users—whether issuers, investors, service providers, operators, or stakers—need to validate their identities through CDD to hold POLYX and therefore use the chain.
Once complete, any accounts a user creates will be securely and confidentially connected to this identity, allowing users to create new accounts and complete transactions as needed. And most importantly, any asset held by a user will be linked back to a real-world identity.
Users can onboard onto Polymesh using designated identity verification providers. The multiplicity of options for identity verification helps to preserve the decentralized nature of the blockchain.
The multiplicity of options for identity verification helps to preserve the decentralized nature of the blockchain.
Meet our Identity Verification Providers: Fractal ID and Netki
Presently, Polymesh integrates identity verification software from Fractal ID and Netki. Together, these providers take every Polymesh user through a KYC/AML process that ensures all actors on the chain are verified, and all transactions are authored by known entities. The tight integration between Polymesh and these providers enables fast and accurate user onboarding, and lays a foundation for compliance with securities regulations across jurisdictions.
Fractal ID, created by Berlin-based company Fractal, provides a quick and efficient user onboarding process for regulated industries with global user bases. It uses technology such as OCR, liveness detection and facial recognition for quick verification of national IDs and passports. Fractal ID is designed to meet bank-level KYC/AML regulatory standards and makes compliance with GDPR and protection of personal data top priorities, without sacrificing user experience.
"Compliance and convenience shouldn't be trade-offs”.
"Our mission with Fractal ID is to enable trusted relationships between people and organizations across borders based on reliable and verifiable information," said Julian Leitloff, CEO of Fractal. "Compliance and convenience shouldn't be trade-offs”.
Netki is a KYC-AML regulatory technology provider developing remote identity verification solutions purpose-built for blockchains. Its flagship KYC and AML solution OnboardID has licensed validations for over 1 million identity documents and its products have been included in the ecosystems of various big players like the IBM blockchain ecosystem, Amazon Web Services Partner Network, Microsoft Azure Blockchain as a Service, among others.
“Polymesh has been a clear leader in building the necessary infrastructure for the Security Token ecosystem” says Justin Newton, Co-Founder and CEO of Netki. “We share their vision that all securities can be digital and tokenized”.
Once onboarded, issuers can enhance Polymesh’s base identity check with additional identity verification or due diligence actions to meet their desired assurance level.