KYC is the illicit activity, so why does bisq support KYC?

Hello Community,

in the past I already encountered some trades where I would take an offer through SEPA and would get shown bank account information from a company. In the past I could decline that offer, I would mark the maker and never trade with him again.

Trading with any company is KYC trading, as a company always have to keep track and record their balance sheet.

Today I unfortunately took another offer just to find out that the market maker was also a company. So I went into mediation and wanted to cancel the trade, because I don’t want to trade with companies. Bisq is supposed to be peer-to-peer and not trading with profit oriented companies. If I wanted to trade with companies I would just go to any exchange without all the hassle bisq requires.

Unfortunately the response I got from @leo816 is this:

I would like the bisq Mediatiors to review this. Trading with companies without knowing that I am trading with companies is unacceptable imo. I am here to trade with Peers. That’s what a peer-to-peer exchange is to me. Like I said, if I want to trade with comopanies I would just go to any big exchange without the uncomfortable setup that bisq needs. Trading with companies is always KYC trading.

Please let me cancel this trade.

And also either block companies from trading on bisq or make it obligatory for them to identify as companies.

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I second these concerns, I am only now thinking of it since it never happened to myself… but KYC is already lurking on Bisq since the trade peer DOES know your identity most of the time, companies on the other hand are sure to record their activities, and most probably will also communicate such details to their jurisdiction entity, so it would be like buying BTC with KYC, only with premium fees that are supposed to be paid in order to stay “anonymous”!!
I understand I can flag a peer to NOT have trades with them anymore, yet trading once with a company has exposed you already anyway!

Companies should be compelled to declare their status BEFORE making or accepting offers, and be penalized if they do not comply.

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Agree with these concerns. Most corporate sellers will have to keep records and so may be required to hand over buyers’ bank details to authorities. Simplest way to address this would be a feature to flag certain sellers as large businesses.

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I agree to this. I think we should know in advance if a trading party is a company or not.

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So, should Bisq implement a Know Your Company rule? How does Bisq know if John Doe, who is a known worker for X company, is not doing a job for that company? Should Bisq also ban a buyer who sends their BTC to an exchange, because that will make the seller looks suspicious? What kind of companies should Bisq blacklist? I bought from a hotel a few years ago.
I don’t think Bisq could stop companies from trading at Bisq, even if there was a good reason for it. Companies should not take any info from you without violating their own privacy policies.

For reference, this is not a new issue: SEPA Seller Name is an Exchange URL

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Hi @BTCGambler

Thanks for raising this issue.

In Bisq support calls a few months ago we discussed companies using Bisq to trade. The consensus reached by support was.

  • Users, if they so wish, should be able to cancel trades when trades with a company that was an exchange, or BTC / Crypto related.
  • Companies should be able to make and take offers on Bisq. Where the company is not an exchange or btc/crypto related then either trader wanting to cancel would risk a penalty

Bisq allows traders to ban particular onion addresses if they do not want to trade with them again.

From my perspective I see a peer to peer market place as being open to all entities (individuals, organizations, and any other structures). All entities have to abide by the same rules and are equal in that they are both committing to the trade the same security deposit.

KYC is not, and should not, be done by any traders on Bisq. If traders even request KYC info please let the mediator know so a penalty can be applied.

As all traders are equal I would be against marking users as indivudal companies. This would cause privacy concerns for users and is also a slippery slope. Eg I would not support users that decide they no longer which to trade with people from a country where no KYC BTC trading is illegal.

I think people making or taking offers on Bisq should be of the perspective.

I am looking to buy/sell X amount of BTC for X price, I will trade with anyone that takes my offer first.
I am happy to buy/sell X amount of BTC for X price irrespective of who I am trading with.

The caveat to the above is for privacy reasons Bisq the transaction should not be able to be identified as a btc trade, therefore, it is ok not to trade with an exchange.

From my own experience using Bisq I have been happy to trade with both individuals and companies. I have never had any reason for concern about who is on the other side of the trade.

Thanks for your response @Pazza

From my perspective I see a peer to peer market place as being open to all entities (individuals, organizations, and any other structures). All entities have to abide by the same rules and are equal in that they are both committing to the trade the same security deposit.

The caveat to the above is for privacy reasons Bisq the transaction should not be able to be identified as a btc trade, therefore, it is ok not to trade with an exchange.

I disagree with those statements though. A company has to declare and justify all their transactions to authorities. Which means if I sell through SEPA to a company(even if no Exchange Company), my bankaccount will be shown in their balance sheet and their transactions that they are gonna provide to authorities.

And I have no control over how they declare those transactions and have to assume it will be declared as BTC transaction which will compromise my security and privacy and I DO NOT want that. That’s why I was using Bisq in the first place.

Therefore I think users should be able to cancel any trade with any company without penalty and would appreciate if you could discuss this in your support chats. Also feedback of other users would be highly appreciated to read here.

As I wouldn’t feel comfortable going forward to use bisq much anymore if I knew at all times that there might be a company on the other side and I wouldn’t be able to cancel,
because my bankaccount and transaction with that company will end up on some balance sheet and transaction list that is handed over to authorities.

Please reconsider this and please once again let me cancel my current trade without penalty. I understand marking companies beforehand brings several security issues in itself, so to not to that, users should be at least allowed to cancel in thos circumstances.

Thank you!

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A company has to declare and justify all their transactions to authorities. Which means if I sell through SEPA to a company(even if no Exchange Company)

From my experience this is not the case. What requirement is there for a company to justify all their transactions to authorities?

My bank account will be shown in their balance sheet

It would be very unusual for bank accounts or individuals names or transactions to appear in a balance sheet. I have never seen a balance sheet that would show that amount of detail.

I have no control over how they declare those transactions and have to assume it will be declared as BTC transaction which will compromise my security and privacy and I DO NOT want that.

Would that not be the case for anyone you traded with, individual or company?

From my experience this is not the case. What requirement is there for a company to justify all their transactions to authorities?

It would be very unusual for bank accounts or individuals names or transactions to appear in a balance sheet. I have never seen a balance sheet that would show that amount of detail.

When they get audited for whatever reason and authorities need to look into every detail of their transactions to check for integrity.

Yes, the chances and risk is way higher for companies than individuals though, therefore I would like the option to opt-out.

Thanks for the additional comments.

I will make sure the above thread is discussed in the next support call and update here as to the outcome.

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I completely agree with @BTCGambler. Let’s face it, chances to fall under government radar is much higher trough dealing with a company than trough an individual. And I think we all can agree on that everybody who is using Bisq would certainly want to avoid that. I personally would like to have an option to opt out from trading with a company, for the above obvious reasons.

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I see no difference between this and an individual bank account.

It’s about choice.

You can already filter based on country when using SEPA following your own risk assessment concerning jurisdiction.

Why shouldn’t it be possible to select the trade partner based on the fact if the trade partner is a legal entity or not. It is clearly a market need according to this thread.

I’m against banning of companies in Bisq, but a clear declaration of the legal status of a trader would be a good thing.

Let the market decide!

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The differences lie in probablity of the event happening and causality.

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Why shouldn’t it be possible to select the trade partner based on the fact if the trade partner is a legal entity or not. It is clearly a market need according to this thread.

How would you define this though.

A legal entity could be an individual or an organization.

An individual can have personal and business accounts.

A business can have account names that appear as if they are an individual.

The sad story continues:

https://bisq.community/t/penalty-for-careless-mediators/11120/2

How would you define this though.

I would implement it as an additional field in the account settings:

  • natural person (NP)
  • juristic person (JP)

Filling out this field would be self-declaration. Failing to declare it correctly makes the trade open to penalties in the mediation process.

In this scenario an account would have a country and legal status as well as a list of accepted countries and legal status.

In the offer book the offers will only match if the country and the legal status are matching.

Examples 1:

  • Account setting of maker: Country DE, Legal status: NP, accepted countries DE, FR, accepted legal status NP
  • Account settings of taker: Country DE, Legal status JP
  • Result: Does not match (trade greyed out)

Examples 2:

  • Account setting of maker: Country DE, Legal status: NP, accepted countries DE, FR, accepted legal status NP, JP
  • Account settings of taker: Country FR, Legal status JP
  • Result: Matches, because maker accepts FR and JP

Related to this suggestion is also this thread Trader doesn't fill his full name bei SEPA If a fake name is used in the account setting, then the legal status can not be determined by the trading partners and would end up in mediation as well.

Thanks for the suggestions.
https://bisq.community/t/as-a-maker-buyer-is-there-a-way-to-set-the-fee-rate/10838/3
Implementing NP and JP would be an option.

If a fake name is used in the account setting, then the legal status can not be determined by the trading partners and would end up in mediation as well.

It a balance between keeping users safe and privacy. I do not think Bisq should be requiring proof of real name. Trading with obvious fake names is a problem eg Mickey Mouse. But when someone trades with a name that could be real I think Bisq should take the trader at their word. Account aging, limits and signing is in place to protect users.

Hi the topic of marking users by personal and entities was discussed again in a recent support call.

The support team were in favor of keeping things as they are and instead reviewing the table of penalties to make sure compensation amounts / penalties are appropriate: Table of penalties - Bisq Wiki

If anyone would like to make a formal proposal for the Bisq DAO to consider with regards how organizations should be treated on Bisq they can open a proposal here Issues · bisq-network/proposals · GitHub

Here is a guide to creating a proposal: Proposals - Bisq Wiki