What is an Unhosted Wallet?
Any unhosted crypto wallet or non-custodial crypto wallet…
“An unhosted, or “non-custodial,” wallet, is one where an individual user controls its private keys, rather than an exchange or trading platform. This gives users full control of their own funds, rather than requiring permission from a third party. (Examples include MetaMask and WalletConnect, or hardware wallets like Ledger and Trezor.)” -
Decrypt, June 20th, 2022
“An unhosted wallet is not hosted by a third-party financial system. It can be very difficult or impossible to determine who is accessing or in control of the use of cryptocurrencies in an unhosted wallet. Unhosted wallets allow for anonymity and concealment of illicit financial activity.” -
US Department of Treasury, December 18th, 2020.
What are the regulations
regarding Unhosted Wallets?
The problem facing crypto businesses and crypto service providers is the emerging global regulatory requirement of identifying unhosted wallets for withdrawals and deposits. This is becoming a legal requirement of crypto businesses due to governments wanting to combat money laundering and illicit activities by deanonymizing crypto transactions that involve regulated crypto platforms.
The EU is leading the way in this regulation, which will likely be followed by codification in the US, UK, Japan and more. The EU Parliament voted earlier in 2022 to require crypto businesses to collect user data on transactions over 1000 euros involving unhosted cryptocurrency wallets. Article 14 of the recent EU legislation specifies the following:
The crypto-asset service provider of the originator shall ensure that transfers of cryptoassets are accompanied by the following information on the originator:
(a) the name of the originator;
(b) the account number of the originator, where an account is used to process the transaction;
(c) the originator's address, official personal document number, customer identification number or date, and place of birth.
The crypto-asset service provider of the originator shall ensure that transfers of cryptoassets are accompanied by the following information on the beneficiary:
(a) the name of the beneficiary;
(b) the beneficiary's account number, where such an account exists and is used to process the transaction.
The Only Unhosted Wallet
KYCTM Solution in Market
Blockpass has the only solution available in the market for proving ownership of unhosted wallets and providing KYC data on the owners of unhosted wallets.
What is the Unhosted
Wallet KYCTM product?
This solution enables a facility whereby crypto businesses can look up whether a unhosted wallet is verified or not and request the KYC data.
Any crypto business or organization providing crypto services, also known as “virtual asset service providers (VASP)” (FATF term) or “crypto-asset service providers” (EU term).
Simple! This product enables transactions between crypto businesses and their users with unhosted wallets to be compliant. The workflow for the Unhosted Wallet KYCTM process is as follows:
The setup is easy and fast! Any crypto businesses or crypto service provider just needs to create a Business Account on Blockpass’ KYC Connect™ and select Enterprise Level.