CLEARS (CLRS)–Know your customer, commonly phrased as KYC, is an umbrella term for business and government specific guidelines for handling mercantile practices. Despite the free market of internet and global trade, governments often impose restrictions and regulatory barriers to insure that merchants do not promote or allow for identity theft, money laundering, etc. While cryptocurrency may offer a significant amount of anonymity, particularly for individuals looking to operate outside of government fiat, companies are still held liable to KYC laws that govern traditional business practices. Which means, a company hoping to engage in the innovation and advantages of cryptocurrency, such as Ethereum smart contracts, are required to properly cover KYC compliance.
“Know Your Customer is a collective term for the processes which companies employ in order to confirm their customers’ real identities. KYC may also be used to refer to government regulations outlining these processes. The purpose of maintaining KYC policies is to prevent such crimes as financial fraud, identity theft, money laundering and terrorism financing.”
Sourced from Cointelegraph.
Know your customer, in relation to crypto-based transactions, has been a time-consuming, costly, and inefficient process for the market to follow. The average crypto-base company spends an estimated 800,000 USD on KYC costs alone to handle a customer base of just 20,000, which are fees passed along to the customer in addition to hurting the accessibility of small business.
CLEARS (CLRS) Simplifying Know Your Customer
CLEARS, a new ICO, is building an application to track KYC via Ethereum smart contracts. Rather than tracking customer and transaction information separately, CLEARS has developed a system for “time-stamping” customers on the Ethereum blockchain to handle KYC regulation. The process uses a unique hash stored on the Ethereum blockchain, maintaining the integrity of customer information while storing the information for return use. Given the close relationship with Ethereum smart contracts, it’s natural that CLEARS is being built as an ERC-20 token. However, the primary function of the currency is to work on top of existing Ethereum smart contracts, as a supporting technology, rather than establishing the utility of a standalone currency.
Taken from the ICO’s website,
“Each company using CLEARS can use its own rules to remain compliant with local and international regulations. CLEARS will continue to check and certify data along the way.”
CLEARS can be compared to tax-law software, allowing users to modify the technology to support their specific laws and government regulations. Similar to other industry leaders, CLEARS seeks to leverage the utility of blockchain for keeping a time-stamped record of KYC, while maintaining security for the information being stored. While the development behind CLEARS is targeting know your customer as its initial project, the technology could expand to other data-rich interactions, such as medical records or judiciary documentation.
CLRS Token as a Means of Exchange
CLRS, the native token behind CLEARS, serves as a means of exchange for the parent company performing KYC implementation. Businesses looking to implement customer regulation through Ethereum smart contracts purchase CLRS tokens, and then contract agents for services and additional options related to KYC. CLEARS “agent” program is scheduled to start in Q4 2018, and includes the recruiting of specialists across the globe for handling the KYC regulatory checks.
The goal of CLEARS is to further reduce the friction of KYC in relation to cryptocurrency. Initial implementation of KYC (time-stamping on Ethereum’s blockchain) occurs within 30 minutes of submission, and is instant for returning users/customers. The company’s intention for the CLRS token is as another cost-saving feature:
“KYC costs and delays are notorious to cripple the crypto industry. Providing service for 20,000 customers starts at ~$800K. By using the same data several times, CLEARS offers a much lower pricing with better efficiency.”
While the CLRS token is not integral to the function of CLEARS in time-stamping customers, it is the means of exchange upon which the technology will function. Agent payments are initiated in CLRS (transferrable around the globe), and will presumably reduce the cost of contracting regulatory assistance. If improved KYC implementation becomes a greater need for the industry with the growth of crypto-based businesses and currencies that function primarily as contracts, the need for a cost-saving tool like CLEARS could grow in demand.