KYC on cryptocurrency exchanges is becoming a trend. But there are still ways to use cryptocurrencies while maintaining privacy and relative anonymity
Cryptocurrency exchange Bybit announced that by May 8, all of its customers will have to pass KYC in order to use any of the platform’s products and services. For the minimum level of verification, users will need to provide identification documents. Also pass identification by photo. The exchange is one of the top 5 largest crypto trading platforms. And before that, it did not impose restrictions, allowing to use the services relatively anonymous.
Governments and regulators around the world are systematically tightening anti-money laundering (AML) compliance requirements for cryptocurrency. Wallet operators and cryptocurrency exchanges are forced to take steps to comply with ever-changing regulations.
Most often, when talking about regulation, the U.S. is mentioned. But the trend toward stricter requirements is not only there, our experts say. The Global Financial Action Task Force (FATF) has been talking about the need to curb the use of cryptocurrencies for money laundering for years. In this case, any crypto-exchange, even if it is not registered in the U.S.. And does not formally work with U.S. users, is at risk if it does not comply with U.S. regulators.
Anonymity and privacy are a thing of the past ?
Non-big crypto exchanges have the ability to adhere to a more flexible KYC/AML policy. But at some point this issue is likely to affect them as well. Therefore, truly anonymous channels for converting cryptocurrencies into fiat money are likely to be gone soon.
Our experts point out that we can already say that there are no more. Because both the bank and CEX see the transaction activity on the bank card. And if it belongs to the person making the transaction, all his activity is already available for viewing.
Small transactions with cryptocurrencies traditionally took place in online exchanges and not on cryptocurrency exchanges. Large p2p services are also seeing a strong tightening of anti-money laundering requirements.
There are OTC (over the counter) exchanges – analog of p2p for large investors. Here coins are sold by big lots. But our experts believe that in the next year or two platforms with low AML and KYC requirements will be forced to at least tighten the requirements. Cryptocurrency has become too visible to leave such freedom for it. Considering that all areas of human life are being totally tightened.
For a really large number of users, privacy as the original ideology and value of cryptocurrency is important. Both in the meaning of “anonymity” and in the context of control over their funds. And the ability to dispose of them as they see fit. Such possibilities still remain, thanks to small CEXs, decentralized exchanges (DEX), private exchanges and OTC services, including those with cash.
This is an advantage of such services, but there are also risks. Because the responsibility and check the reliability of services lies on the user himself. Under these conditions, many users will choose not to be anonymous for the sake of convenience and security. But there will always be choices for those for whom privacy is more important.
India announces plans to develop global crypto-regulation rules
Individual legislative reforms will not solve the problem of cryptocurrency risks....
Dubai strengthens control over crypto-businesses in order not to become a global center for money laundering
Regulators in Dubai intend to bring local companies and major exchanges into the legal...