If you have been following the news around NFTs, then you will agree with me that the majority of NFT Auctions didn't come with KYC for participants. The reason is that people and projects are still promoting anonymity in the digital space, but as you know, new events and achievements call for a new approach.
A metaverse or blockchain-based virtual world from Yuga Labs, Otherside has made it public to those who are interested in participating in the forthcoming virtual land sales, that there is going to be a KYC verification for participants. Only those who passed the verification process can be able to participate in the land auction. Yuga Labs is the creator of popular NFT collections like Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC). They are one of the popular figures in the NFT ecosystem.
What could have prompted this KYC verification and what are the possible impacts?
There was no official reason released by the project with regards to why they will bring up KYC into the NFT ecosystem for the first time but there are many factors that are to be considered as the motivating factors. First, in March, Yuga Lab raised a whopping $450 million in seed funding to build the Otherside. This is a huge amount of money that by now has attracted the interest of regulators.
With the ongoing claims that stolen money is being stored in NFTs and the fact that the decentralized nature of the Blockchain won't hide projects from the reach of Regulators, especially for a project like Yuga Labs with a known figure like Andreessen Horowitz, private American venture capital firm, it is wise that the company starts early to save itself from Regulators.
Those who have participated in the seed funding of new crypto projects will agree with me that KYC is used by most LEGIT projects for their seed phase.
The implication this will have on the forthcoming virtual land sale is that the turnout might be low. Many wealthy people are not comfortable with revealing their identity online. We might see more fights on NFTs from regulators because of the huge amount of money pumped into NFTs.
I may not be a fan of KYC but I believe that we need it if we want to reduce the rate of crime online.