Identity & compliance in Web3 remains a major impediment to adoption in the blockchain ecosystem. Previous attempts to solve portable identity in Web3 have failed due to (1) the tremendous complexity of “know your customer” (KYC) and “anti-money laundering” (AML) processes and (2) the stubborn and persistent inability for end-users to seamlessly move between projects. Transnational Web3 projects may also encounter jurisdictional discrepancies that further stymie participants’ efforts to accurately validate identity information. What’s more, most Web3 projects have no incentive to preserve the results of any attempts at KYC/AML for future use. Today, Parallel is announcing a solution: The Parallel Identity (PID) Token.
The PID Token is a fully on-chain, non-transferable identity token that preserves the Web3 principles of decentralized anonymity while confirming critical aspects of a wallet owner’s identity. The PID Token never stores or displays any Personal Identifying Information (PII), but does contain necessary information to assure market participants that their counterparties do not have a history of fraud and are not subject to sanctions.
The PID Token is supported by a regulatorily compliant KYC/AML process and indicates:
- whether the owner is a natural person or business entity
- that the owner has submitted information necessary to complete a KYC/AML review with Parallel
- that the owner is not currently sanctioned and is being monitored for new sanctions
The PID Token can even assert the owner’s 506(c) investor accreditation status. The token can interact directly with smart contracts, which can in turn require all parties to hold a valid PID Token as a condition of participation. In keeping with industry best practices for document renewal, all PID Tokens are monitored for one year against sanctions lists (such as OFAC), after which time token-holders must reconfirm their identity details and wallet ownership.
Parallel Markets has been focused on this problem of repetitive KYC/AML processes and 506(c) accreditation verifications for more than four years. We have helped more than 75 financial institutions onboard tens of thousands of natural persons and business entities. We are excited about our progress to date and even more excited to bring that expertise to Web3. We do not consider portable, reusable identity a Web2 or Web3 issue, buta universal issue. Every person and business should be able to own their identity, prove it once, then share it with whomever they choose in order to do business.
“Parallel has been an excellent partner for our KYC/AML and Accreditation verification needs, fulfilling a core utility for our network’s participants. We’re excited that solutions are continuing to develop in this space and look forward to seeing what Parallel builds with the PID Token.” —Mike Sall, Co-Founder, Goldfinch, CEO, Warbler Labs
While banks may approach identity & compliance differently than would a DAO or NFT marketplace, both TradFi and DeFi are increasingly plagued by money laundering and financing terorrism, and need a way to conduct trusted, secure business. We must find solutions that both work to exclude bad actors while allowing users to remain as anonymous and protected as possible.
To realize its full potential, Web3 will require an identity and compliance layer. We at Parallel are proud to build what we believe is a critical piece of infrastructure for the future of Web3. Today we are launching the PID Token with some fantastic partners like Guild, 101.xyz, Goldfinch, Serotonin and others and look to collaborate on many more projects in the coming months and years.
Disclaimer The information contained in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this article without seeking legal or other professional advice.