I thought KYC on a public ledger was an oxymoron. Turns out XLS-70 makes it work without exposing your personal data on-chain.
Here's how it actually works: a trusted credential issuer, a licensed KYC provider, an exchange, whoever, issues a signed credential to your XRPL account. That credential just says "this account passed verification." No name, no passport scan, nothing sensitive. The issuer's signature is the proof.
Token issuers can then require that credential before allowing a trustline. So if you haven't been verified, you literally can't hold the token. Compliance without a centralized blocklist.
When I built Rhyzlo's risk scoring, I added XLS-70 credential detection as a trust signal, accounts holding verified credentials get a meaningful score reduction. Not because KYC is perfect, but because it signals the issuer is operating in a regulatory framework and has real accountability.
The catch: adoption is still early. Most XRPL tokens don't use it yet. But for any issuer targeting institutional holders or regulated markets, this is the only real on-chain compliance path the ledger currently has.