Kategorie: Crypto Markets

The initial level of anti-money laundering (AML) reasonable care is called “know your customer,” or KYC for short. The Know Your Client (KYC) processes are initiated as soon as a new customer is accepted by a financial institution (FI). Financial institutions may determine a client’s potential for financial crime using these procedures. When doing business, cryptocurrency exchanges are required to have a “Know Your Customer” (KYC) procedure to:

• Check the accuracy of the data they have about their clients and customers.

• Get a better grasp on the nature of their prospective clients’ actions and make sure they’re above board.

• Establish the likelihood that their clients pose a money laundering danger.

How do VASPs demonstrate KYC compliance?

Many VASPs use a multi-step “Know Your Customer” procedure to guard against scams. Here are the measures to take:

• Step 1: Customers’ identifying information (such as their complete names, birthdates, and addresses) must be collected.

• Step 2: Check the information you gave against your government-issued ID (visa, state driver’s license) and proof of address (electricity bill).

• Step 3: Check the user’s data against government records that track politically exposed persons (PEPs) and blacklisted people.

By adhering to these protocols, banks can determine whether their customers are at risk for money laundering as well as other misappropriation of funds related to their usage of cryptocurrency. When a client’s identity and other details are verified, they are given access to a limited set of features on a bitcoin trading platform. 

How does one keep track of crypto trades? 

A cryptocurrency transfer monitoring network provides cryptocurrency marketplaces and financial institutions with assistance in spotting anomalous or questionable behavior that they are required to disclose to government regulators. Additionally, this technology assists law enforcement in their pursuit of criminals. The security of a cryptocurrency wallet may be tracked by keeping an eye on its transaction activity. Toolkits developed by firms like Bitsoft360, Crystal Blockchain, Coinfirm, etc. are used by cryptocurrency-related exchanges.

Is Know Your Customer (KYC) compliance essential for cryptocurrency wallets?

Since only custodial wallets have access to their users’ encryption keys, they are the only ones required to follow KYC procedures. The VASP document explains that the Financial Action Task Force (FATF) considers “every legitimate or natural entity who swaps, retains, safe-keeps, distributes, transforms, or somehow distributes VAs on account of some other physical or legal entity” to be a VASP. 

Since VASPs are now considered “monetary organizations,” they too must implement rigorous annual compliance requirements (FYC).   To comply with regulations, VASP-related custodial wallet providers must have a “Know Your Customer” (KYC) policy.

In what ways may cryptocurrency KYC help you?

Here are some of the reasons why cryptocurrency exchanges get a major advantage from operating in conformity with regulatory requirements, even though doing so necessitates certain alterations to their operational procedures and presents some challenges:

An increase in consumers’ faith in business

Trust in businesses and their products can only increase when their users’ identities are independently verified. Customers are more inclined to stick with a trading platform if they believe the firm is taking reasonable precautions to keep their funds secure.

Reduced instances of fraud and money laundering 

Nearly one billion dollars in cryptocurrency was reported stolen from over 46,000 customers between January and March 2022. As Fletcher predicted, identity verification procedures that are thorough and accurate could cut down on fraud and improve the market’s reputation.

Lessening potential legal trouble

Strong “Know Your Customer” (KYC) procedures can help organizations stay ahead of changing regulations. By demanding government-issued credentials and tracking payment situations and holdings, KYC approaches allow VASPs to detect and limit false identity cases, avoid financial fraud, and evaluate client risk. 

By taking these measures, companies may lessen their exposure to legal and governmental concerns, freeing up resources that can be used toward other goals, such as improving exchange rates, speeding up processes, and ensuring compliance.

Improved market conditions 

Speculative, anonymous transactions are a major driver of the bitcoin market’s instability. The industry as a whole benefits from the greater stability and value development enabled by KYC procedures with enhanced identity verification.

Is Know Your Customer (KYC) mandatory to purchase cryptocurrency? 

You may buy VAs without completing a “Know Your Customer” check. Examples of non-KYC services are cryptocurrency ATMs and DEXs. Unlike DEXs, which are decentralized, blockchain-based P2P exchanges that allow for large-scale crypto asset trading, crypto ATMs allow customers to acquire bitcoin using cash or debit cards. Instead of serving as financial intermediaries, DEXs rely on algorithmic automation to carry out these functions.

What dangers exist while purchasing cryptocurrency without KYC?

It’s quite risky from a regulatory perspective to purchase virtual currencies without first undergoing KYC. Financial authorities, including the Office of Foreign Assets Control (OFAC), have fined cryptocurrency exchanges for alleged sanctions violations. Black market accounts, which pose a risk to assets, may be flagged as false by a platform.

Lack of “Know Your Customer” in exchanges

Popular DEXs like Uniswap and Bisq does not require KYC procedures from their users. These marketplaces connect sellers and purchasers of digital money by matching orders according to price and quantity. In the world of cryptocurrencies, a “liquidity pool” is a collection of commodities that can be quickly and easily converted into cash to settle incoming buy and sell orders. Assets are provided not by banks or other institutions but rather by end users. 

How does “Know Your Customer” (KYC) connect to the ‘Crypto Travel Rule? 

When discussing cyber safety, “Know Your Customer” and the “Crypto Travel Rule” are both essential concepts to grasp. While the Travel Rule mandates that FIs and VASPs obtain and communicate opponent information, KYC gathers and transmits data about the persons and institutions that utilize the FI or VASP.

The distinction between “Know Your Customer” and the “Travel Rule” 

Before enabling a consumer to use their system, a VASP must do know-your-customer (KYC) checks to ensure that they comply with international rules. The Travel Rule goes even further by requiring that personally identifiable information of consumers be shared and stored when purchases between two VASPs that have already done KYC on their clients exceed a certain level.

How come Anti-Money Laundering and Know-Your-Customer measures are so vital to the cryptocurrency sector?

Customers and VASPs alike benefit from strict observance of AML and KYC rules. Virtual currencies, unlike fiat cash, lack a robust regulatory structure. 

Criminals are increasingly capitalizing on the ability to send money while concealing its origin and destination. The risks of money laundering, terrorism funding, and other forms of illegal financing may be reduced by standardizing regulatory standards and conducting Know Your Customer and Anti-Money Laundering inspections.

Final thoughts 

Cryptocurrency transactions are far more secure when KYC is used. To prevent fraudulent fraud and ensure the safety of financial transactions, Know Your Customer (KYC) measures are essential. Although this post does not provide insights on KYC implementation, it has given you enough details to make a wise plan.

The post An introduction to KYC: the most significant feature in the crypto world appeared first on CoinJournal.

• The SEC’s first crypto-related enforcement action was in July 2013.
• The agency has brought 127 such actions since, with 30 of these in 2022 representing a 50% increase from 2021.
• The monetary penalties across the settlements with the regulator reached $2.61 billion by the end of last year.

According to a recent report by Cornerstone Research, the US Securities and Exchange Commission (SEC) has overseen 127 crypto-related enforcement actions since 2013. 82 of the actions so far have been litigations and 45 of them administrative proceedings.

SEC crypto-related fines hit $2.6 billion by 2022

The US Securities and Exchange Commission (SEC) has recently come under heavy criticism after cryptocurrency exchange FTX collapsed. For the most part, many have questioned the regulatory watchdog’s tendency to swing into action after events that see the ordinary public suffer huge losses in the market.

And no doubt, the SEC swiftly charged former FTX CEO and founder Sam Bankman-Fried following his arrest. Also charged were Alameda’s Caroline Ellison and FTX’s Gary Wang. Just a few days ago, as we highlighted, the agency filed charges against crypto platforms Gemini and Genesis.

It’s a pattern that falls in line with what has been labelled as “regulation by enforcement.”

Indeed, even as the crypto market navigates the crypto winter, regulatory clarity remains a long way off. However, enforcement actions have increased rapidly since the SEC’s first such move in July 2013.

In 2022, the securities market watchdog filed 30 enforcement actions touching on 79 market participants, including the February charge against crypto lender BlockFi.

Per the Cornerstone Research report, the enforcement actions in 2022 were against 56 individuals representing 71% of the allegations and 23 were against firms (29% of the actions). The total enforcement actions over the past year was double the actions filed in 2021, the report noted.

In terms of monetary penalties, settlements with the agency hit $242 million in 2022 – with the total fines since 2013 amounting to $2.61 billion as of 31 December 2022. As CoinJournal reported in October, the SEC fines include the $1.3 million levelled against celebrity Kim Kardashian for her promotion of the crypto project EthereumMax.

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• At press time, Shiba Inu was trading at $0.00001233.
• Upbit now allows users to trade SHIB against won.
• Upbit is the most popular crypto exchange in South Korea.

SHIB’s bullish trend has been gaining momentum by the day as more and more developments about Shiba Inu continue unfolding.

It started with the announcement about the Bugatti Group partnership which added more weight to the already bullish trend that set the price of SHIB towards $0.00001. Then came the recent announcement about the upcoming and much-anticipated Shibarium Beta launch that sent SHIB past $0.00001.

Listing on Upbit

As if all that is not enough, Upbit, the most popular cryptocurrency exchange in South Korea has announced listing the SHIB token and allowing its users to trade it against the won, South Korea’s national currency. The listing has pushed the price of SHIB above $0.000012.

In addition to Shiba Inu, Upbit also added GALA which will be available for trading against Bitcoin (BTC).

Besides South Korea, Upbit has grown to become the biggest crypto trading platform in Southeast Asia, besides temporarily suspending Stellar (XLM) deposits and withdrawals last week. Two weeks ago, the exchange also signed a partnership with Italian football club Napoli SSC to see the Upbit logo feature on the back of the club’s shirts.

SHIB now among top traded crypto

As Shiba Inu approaches crucial zones that may trigger a bull run towards $0.00002 SHIB has entered the list of top-selling tokens, top traced cryptocurrencies, and top purchased tokens according to data from Whalestats.

Whales also seem to be rushing to accumulate Shiba Inu tokens; something that may signal they have confidence in the token rising higher this year. In addition to Ether (ETH), ETH whales hold about 505.52 billion Shiba Inu tokens worth about $6 million. This has placed SHIB among the most preferred cryptocurrencies among the top 100 Ethereum whales.

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• Kevin O’Leary thinks the crypto market should be ready for another FTX-like collapse, noting this will 100% happen.
• According to the venture capitalist and “Shark Tank” star, crypto needs to move away from a “unregulated cowboy environment” that’s full of rogue players. 
• The billionaire investor thinks the scenarios where an exchange goes burst will keep happening over and over until regulations begin to change some of the factors enabling the failures.

Kevin O’Leary, the Chairman of O’Leary Ventures and a seasoned investor, has shared his outlook on the crypto market, suggesting in a recent interview that the industry could yet see another major meltdown.

Particularly, the ‘Shark Tank’ star believes more unregulated cryptocurrency exchanges will fail, even as the regulatory landscape improves to put rogue players in check.

O’Leary says new exchange collapses 100% will happen

O’Leary came under heavy criticism in the aftermath of the collapse of FTX, with his role as a spokesperson attracting the ire of Crypto Twitter even as the FTX Token plummeted and he claimed he lost money on the exchange.

Now he says he can never buy any of these exchange tokens, and that platforms incentivising customers to buy tokens with offers of trading fee discounts are perpetuating a scheme that will see many people lose their money.

Asked whether he thinks there’s going to be another FTX, O’Leary noted there would. He told Kitco News anchor David Lin on Tuesday that it doesn’t worry him.

“I’m not worried, but if you’re asking me, will there be another meltdown to zero absolutely 100% it’ll happen, and it’ll keep happening over and over. All of these exchanges, all of the unregulated exchanges are having massive outflows now. The smart money has got the joke, they saw what happened with FTX and are not sitting around for an explanation.”

The venture capitalist went on to highlight that any exchanges not willing to be fully and properly audited – those that still don’t fancy transparency – will see an exodus of institutional capital. On such exchanges he said, the “unregulated cowboy environment” will end. And there are going to be many more collapses as the space matures under a robust regulatory framework.

“I think we just need to treat crypto like any other regulated asset,” he noted, adding that this is likely to happen sooner as more companies, including USD Coin stablecoin issuer Circle, pursue a proper regulatory environment.

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