KYC-Driven Cryptocurrency Wallet: A Solution To Regulatory Compliance

Abstract

Cryptocurrencies have altered digital finance by offering decentralization and privacy, yet they face significant regulatory challenges and bans in various countries due to concerns over financial crimes, economic stability, and illegal activities. This paper aims to abolish these bans by integrating strict compliance standards into a centralized regulatory system for cryptocurrency wallets. The proposed system combines KYC-driven processes, anti-money laundering (AML) protocols, NFC-enabled device verification, taxation, and other regulatory controls within a hybrid crypto-wallet model that balances user autonomy with centralized oversight. A Central Governing Committee oversees key functions like transaction management, currency exchange, and user verification, supported by robust security measures including biometric authentication and encrypted key management. By addressing global concerns related to money laundering, terrorism financing, economic disruption, and tax evasion, this solution seeks to harmonize cryptocurrency use with existing financial systems while preserving the core benefits of digital assets.