KYC and AML regulations in Crypto Exchange
The blood of the crypto commerce market is cryptocurrency exchanges. As we all now they facilitate the actual trading and exchange in terms of cryptocurrency. The market is similar to the functions the forex market, there are crypto pairs that can be bought and sold with traders making a profit via the fluctuations in the crypto exchange rates.
There are plenty of exchange platforms all over the web and they have different incentives to attract customers. In recent days, the government has been maintaining a strong view on crypto exchanges in the area of KYC and AML regulations. Why so important?
Problems in the past:
Many cryptocurrency exchange platforms now have legitimate rules concerning account verification. This made the cryptocurrency a trusted one. In times past, an unverified account could still carry out transactions up to a certain limit. But nowadays, customers have to verify their accounts before they can even begin to trade on the platforms. Illegal trading accounts are increasingly being outlawed by many governments. For example, in South Korea the government had banned all anonymous cryptocurrency trading accounts.
Bitcoin trading platforms have been opening a wide opportunity for introducing KYC rules into the cryptocurrency space. There aren’t a lot of entry points for KYC regulatory framework in the overall blockchain and cryptocurrency construct.
KYC stands for “Know Your Customer.” It is a process of obtaining relevant identifying information about the customers of a service. The main purpose of this to ensure there are no anonymous traders in the platforms. Now, all the recent platforms are come with the KYC as mandatory due to strict regulations.
Anti-money laundering is the policy used for regulating the bitcoin exchange users account to ensure that there is no illegal transactions are happening. It is the standard method strictly attributed to every exchange at the moment. According to the data, over 90% of crypto exchanges have implemented this regulation in their platform. This leads to the two terms should be important to consider if you own an exchange.
Hope that we cleared the importance of AML and KYC in the exchanges. Still, if you have the question to ask, fill out the form and get a free consultation from bitcoin specialists.