PII collection involves gathering Personally Identifiable Information, which includes any data that can be used to distinguish or trace an individual’s identity. Examples include names, addresses, identification numbers, and biometric records. This process is often necessary for legal compliance, service provision, and security measures, but it carries significant privacy implications.
Context
In the digital asset sector, PII collection is mandated for many regulated entities as part of Know Your Customer and Anti-Money Laundering procedures. Cryptocurrency exchanges and other virtual asset service providers must collect and verify user identities to prevent illicit financial activities. This requirement presents a tension between the privacy principles often associated with blockchain technology and the regulatory demands for user identification, influencing user onboarding and data management practices.
The Treasury's withdrawal of the unhosted wallet NPRM eliminates a significant, technically infeasible KYC burden, de-risking the self-custody sector and affirming a path for decentralized finance.
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