A Reddit user, ShadowOfHarbringer, has introduced a draft proposal for a “Zero-KYC Assurance Mechanism for Fiduciary Money Transfer” (ZKAM-FMT). 

The proposal aims to prevent man-in-the-middle (MitM) financial scams in peer-to-peer (P2P) cryptocurrency markets.

ZKAM-FMT sets out to secure transactions without relying on Know Your Customer (KYC) processes, which have been seen as burdensome and invasive by users who prioritize their privacy.

The proposed mechanism

In a common MitM scam, the bad actor intercepts a transaction between two honest parties, tricking an unsuspecting buyer into transferring funds to a crypto seller account.

The crypto seller then unknowingly releases funds to the bad actor, leaving the buyer without their purchase and the seller with potential legal consequences.

The ZKAM-FMT proposed solution suggests an integrated browser within P2P market applications that verifies transaction details, including amount, transfer title, and account number.

The process verifies the data without storing sensitive user data or bank system interaction, ensures funds are handled appropriately, and mitigates privacy concerns.


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Implementation concerns

Although the Reddit user’s proposal offers a new approach to scam prevention, some implementation challenges were raised.

One substantial challenge is integration with banking websites, which could pose complications due to update requirements and the nature of banking platforms.

The Reddit user highlights the “biggest downside” of the proposal as not the surveillance but the lack of use of bank websites to make transfers by “young people.”

“They use apps. In the case the customer wants to use an app, this scheme becomes useless."


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Ageism or necessary scam prevention?

In an interview with Cointelegraph on Sept. 1, Adrian Przelozny, CEO of Independent Reserve, explained that “people over 65” are more likely to be scammed.

According to the cryptocurrency exchange exec, 80-year-olds who make crypto withdrawals “are going to get a call” because they are more likely to fall victim to scams.

However, in the United Kingdom, younger customers are more likely to be scammed, according to Lloyds Bank in November 2023. The bank claimed that individuals aged 25-34 comprise a quarter of all crypto scam victims.

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