The debate over privacy-focused onboarding has been reduced to a simple yes-or-no on KYC. But that binary framing misses the more useful question: what information does a platform actually need, and how can it address risks without collecting identity documents?
The KYC Binary Trap
Many discussions treat KYC as an all-or-nothing requirement. Platforms either collect full identity documents or they don't. This ignores the middle ground where targeted measures can manage risk while preserving user privacy. The real issue isn't whether to do KYC, but what data is truly necessary for the platform's specific risk profile.
What a No-KYC Model Requires
A credible no-KYC model isn't just about skipping ID checks. It requires clear account rules and specific measures to address risks. Without those, the model lacks credibility. Platforms need to define what users can and cannot do, and enforce those rules through other means — such as transaction limits, behavioral monitoring, or reputation systems. The key is to design a system that addresses the actual risks without defaulting to document collection.
Balancing Risk and Privacy
The challenge is to find the right balance. Collecting less data reduces privacy risks but may increase other risks, such as fraud or abuse. The key is to identify the specific risks a platform faces and design measures that address them without requiring identity documents. This approach shifts the focus from compliance checkboxes to actual risk management.
The Path Forward
The conversation needs to move beyond the KYC binary. The real question is not whether to do KYC, but how to achieve the same risk management goals with minimal data collection. Platforms that succeed will be those that can demonstrate a credible no-KYC model. The next step is for platforms to show that clear account rules and targeted measures can replace traditional KYC, and for the industry to define what 'credible' means in practice.
