Regulatory Engagement

All participants on Liquid undergo stringent KYC (Know Your Customer) and AML screening​:

Liquid integrates with providers like Civic and Sumsub to verify government IDs, perform liveness checks, and run sanctions/PEP (Politically Exposed Person) lists. The verification process is user-friendly (taking just a couple of minutes via the user’s smartphone or webcam), but robust. Only verified individuals or entities can tokenize assets or trade on the platform.

Each verified user is tagged with a jurisdiction and investor status in Liquid’s database (e.g., US – accredited, or UK – retail, or SG – institutional). These tags are crucial for compliance gating. Liquid will automatically restrict what a user can do based on their profile:

• A U.S. retail investor might be barred from buying certain tokens (Reg D offerings meant only for accredited investors) – the UI will not allow it.

• A user from a country under sanctions or where crypto asset trading is banned will be prevented from participating entirely (Liquid is not available in those jurisdictions).

• If a user’s status changes (say they become accredited or their KYC expires after a year), Liquid prompts re-verification or updates permissions accordingly.

On the blockchain level, Liquid can employ techniques like Civic Pass which issue a non-transferable NFT to KYC-verified wallets. Our smart contracts can check for the presence of a valid “verification NFT” in a wallet before allowing transfers in or out. This means even if someone interfaces directly with the token on-chain, the compliance rules persist (if they are not verified, the token won’t move to them – e.g., the transfer will fail due to our program logic). This two-layer approach (off-chain DB + on-chain token controls) ensures compliance cannot be easily circumvented.