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Cryptocurrency KYC [why it matters]

There’s no escape from KYC in the world of finance and banking operations. For the newbies out there, KYC means Know Your Customer. It is a mandatory process for identifying and…

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There’s no escape from KYC in the world of finance and banking operations. For the newbies out there, KYC means Know Your Customer. It is a mandatory process for identifying and verifying customers the world over. In this post, we will give an overview of what KYC is, where it came from, the difference between KYC and AML, why it’s important and what you may need to provide and we’ll take a look at KYC and digital cryptocurrency exchanges. Without further ado, let’s dig into ‘Cryptocurrency KYC [why it matters]’.

Table of Contents

Why introduce KYC?

KYC laws were introduced in 2001 as part of the Patriot Act which was passed after 9/11 to provide a variety of means to deter terrorist behaviour.

By first verifying customers’ identities and intentions and then understanding their customers’ transaction patterns, financial institutions are able to more accurately identify suspicious activities.

Terrorist financing and money laundering often rely on anonymously opened accounts, and the increased emphasis on KYC regulation has led to increased reporting of suspicious transactions.

Regulations are becoming stricter, meaning financial institutions have to spend more money to comply with them—or be subjected to steep fines.

KYC in the cryptocurrency sphere is something that is increasingly important as the industry matures

KYC and AML: What’s the difference?

The AML concept is much broader than KYC. AML stands for Anti-Money Laundering and refers to a set of policies, laws, and regulations to combat generating income in a fraudulent way.

An AML program may consist of the following:

  • KYC procedure: Customer Due Diligence (CDD) and Enhanced Due Diligence(EDD).
  • Risk-based AML policies
  • Ongoing Risk Assessment and Ongoing Monitoring,
  • AML compliance training programs for staff
  • Internal Controls and Internal Audits

Why does KYC matter?

Cryptocurrency KYC is a manual process that includes physical verification of document scans. It is important because it makes sure that the customer and the information provided by them are real.

KYC and digital exchanges

While some people may see anonymous trading as a feature of the cryptocurrency market, it can also enable problematic business practices and criminal or terrorist activity. Anonymity in the wrong hands can be a dangerous weapon.

In essence, the cryptocurrency KYC process for digital exchanges and banks is the same. It always requires proof of identity (POI), proof of address (POA), and other relevant information for verification. However, the actual steps included in the process may differ from exchange to exchange

Cryptocurrency exchanges can request or accept different types of IDs, ask to sign different forms, and include different procedures overall.

OK, I know KYC is my friend, but I still want options on no KYC needed digital exchanges…

There are several bitcoin exchanges on the market which allows you to use the services without verifying your identity. This means that during registration no personal details need to be provided. At an anonymous bitcoin exchange, most of the cases you just need to provide an email and a password and you can trade instantly.

A limitation (depending on your viewpoint on the subject of KYC) of anonymous crypto exchange platforms is they apply a threshold for unverified users both in terms of trading volume and daily or lifetime withdrawals. This can cause a potential problem to those who would like to engage in trading activity anonymously with a high amount of funds.

Exchanges that offer no KYC options include:

PrimeXBT.com Bitmex.com Livecoin.net  HitBTC

***At cryptocoindude.com, we’d always recommend a regulated exchange that offers robust KYC and AML as this offers a piece of mind that is hard to put a price on.***

OK… which documents do I need?

The most important documents for submission are proof of identity and proof of address.

The following documents are generally accepted as proof of identity:

  • Passport;
  • Driving license;
  • Voter’s Identity Card

When it comes to proof of address, the documents that can be submitted are as follows:

  • Passport;
  • Utility bill, e.g., telephone bill, electricity bill, gas bill;
  • Bank account statement with signature verification;
  • Letter from employer, bank manager of scheduled commercial banks

*** TOP TIP – Always have up to date documentation saved in the correct format ready to upload to pass KYC. Passing the checks in one attempt is the best way to reduce the frustration of back and forth’s between the platform’s support team***

What happens after verification?

KYC updates also include monitoring customer transactions, which is an essential element of the KYC policy. Why is it done? To be able to differentiate between normal and suspicious customer behaviour in the financial sector, this behaviour needs to be analysed in the first place. It’s better done through transaction monitoring.

Some problems with KYC

Given the cost of instituting KYC/AML, startups and smaller companies are often the ones who suffer the most. A company that cannot afford to dedicate funds toward KYC/AML regulation, in many cases, will not receive licensing.

Cryptocurrency KYC [why it matters] final conclusions

KYC/AML at the moment acts as a double-edged sword. Implementation has the ability to attract investors who are sceptical of the security in the crypto industry. However, they also can limit innovation altogether by restricting licensing to companies which cannot afford the cost of KYC/AML upkeep.

In an increasingly regulated space, KYC will become increasingly used as the standard when using platforms the most notable thing KYC does is provide the crypto industry with some much-needed maturity. Decentralised trust will be the cornerstone of peer-to-peer shared economies of the future.

Source: https://cryptocoindude.com/cryptocurrency-kyc-why-it-matters/?utm_source=rss&utm_medium=rss&utm_campaign=cryptocurrency-kyc-why-it-matters

Blockchain

U.S. Treasury Targets Stablecoins in Latest Regulatory Risk Assessment

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As regulatory pressure mounts in the U.S., policymakers are putting stablecoins at the top of their agendas.

Citing “people familiar with the matter,” Bloomberg has reported that officials are crafting a policy framework set to be released in the coming weeks. Their primary concern is ensuring that investors can reliably move money in and out of tokens, it added.

The anonymous insiders are worried that a “fire-sale run on crypto assets could threaten financial stability and that certain stablecoins could scale up dangerously fast.”

Strengthening Regulatory Efforts

The Financial Stability Oversight Council is also preparing a formal review into whether stablecoins pose an economic threat.

The officials are focusing on how stablecoin transactions are processed and settled and whether market conditions have an impact, it added. Tomicah Tillemann, global head of policy at a crypto fund run by venture capital giant Andreessen Horowitz, commented:


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“It is significant and very consequential that we are witnessing early steps to create a regulatory framework around digital assets. That’s a big deal.”

The report, when released, will go to the President’s Working Group on Financial Markets. The body includes key agency heads such as Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and Securities and Exchange Commissioner Chair Gary Gensler.

In late July, Yellen called for urgency in regulating stablecoins after stating that they are not adequately supervised. Gary Gensler echoed the sentiment in early August, stating that regulators must act to protect investors from fraud.

Also, in late July, Acting Comptroller of the Currency, Michael Hsu, said regulators are looking into Tether’s commercial papers to see whether each USDT token was really backed by the equivalent of one U.S. dollar.

Tether has repeatedly issued assurances that its reserves are fully backed but has yet to produce a full independent audit.

Stablecoin Ecosystem Update

Tether remains the market leader with a current supply of 69.4 billion, according to the Tether Transparency report. This is close to the all-time high for USDT, which tapped 70 billion earlier this week.

Of that total, 36 billion or 51.8% is based on the Tron network, with 33.8 billion or 48.7% running on Ethereum. USDT supply has grown by 232% since the beginning of the year.

Rival stablecoin, USDC, from Circle currently has 29.3 billion in circulation after gaining 651% in terms of supply growth so far in 2021.

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Source: https://cryptopotato.com/u-s-treasury-targets-stablecoins-in-latest-regulatory-risk-assessment/

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Blockchain

Bitcoin dominance is an irrelevant metric unless…

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The volatile cryptocurrency market has given way to multiple metrics for the market observers to analyze and predict what’s coming next. One such metric has been Bitcoin dominance, but as per Su Zhu, it should not be relevant to you unless you are a billionaire.

How so?

The CEO of Three Arrows Capital opined this after noticing the trend of the newcomers avoiding Bitcoin and Ethereum and opting for risky crypto tokens. When the largest digital asset was stuck in a wider correction period, altcoins like Dogecoin [DOGE] grabbed much attention. This was possible due to the hype created by Tesla CEO or, self-proclaimed “doge-father,” Elon Musk and the Doge community.

However, understanding the newcomers’ enthusiasm Zhu opined that if he were to bet on projects now, he would choose Solana and Avalanche.

Despite the popularity of altcoins, the exec remained bullish on Bitcoin and Ethereum as he expected, the former to flip gold’s market cap, and the latter to eventually hit a value above $25,000. Bold predictions, but nothing we haven’t heard before.

However, newcomers were more bothered about the dominance metric but as data suggested, Bitcoin dominance has recently been falling. The dominance was hit earlier but recovered to form a peak at 49.25% on 30th July. But given the correction phase that followed, the dominance of BTC fell and was last noted to be at 40% on 10th September.

It is interesting to note that despite plenty of adoption related news such as that of El Salvador, coming in over the past few weeks, it looks like the dominance has remained unaffected by it.

Source: CoinMarketCap

Twitter user and crypto enthusiast, @HsakaTrades also noted that Bitcoin dominance was not a relevant metric for anyone who has a “sub mid 9fig portfolio]. Agreeing with Hasaka, Zhu added,

“To clarify, if you’re holding for 5+ yrs, you shouldn’t be thinking about btc dominance in the first place. And obv btc and eth have a strong place in that portfolio.

If you’re allocating actively atm, and think debating btc v eth v alts is a good framework, you’re ngmi.”

While this advice could stand true for experiences, long-term trader interested in making money, but not the ones looking out to invest in tech. This was especially highlighted in the comments wherein the crypto users were upset about the CEO’s Solana [SOL] recommendation that recently witnessed an outage.

Nevertheless, the trading advice and strategies differd from trader to trader and Zhu’s opinion to not focus on the BTC dominance, prebably stemmed from a hodlers perspective. While interesting projects were now erupting in the crypto space, it looks like Bitcoin’s dominance, not only in terms of price, but as a crypto project could be challenge.

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Source: https://ambcrypto.com/bitcoin-dominance-irrelevant-for-anyone-not-10figs

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Blockchain

U.S. Treasury Targets Stablecoins in Latest Regulatory Risk Assessment

Published

on

As regulatory pressure mounts in the U.S., policymakers are putting stablecoins at the top of their agendas.

Citing “people familiar with the matter,” Bloomberg has reported that officials are crafting a policy framework set to be released in the coming weeks. Their primary concern is ensuring that investors can reliably move money in and out of tokens, it added.

The anonymous insiders are worried that a “fire-sale run on crypto assets could threaten financial stability and that certain stablecoins could scale up dangerously fast.”

Strengthening Regulatory Efforts

The Financial Stability Oversight Council is also preparing a formal review into whether stablecoins pose an economic threat.

The officials are focusing on how stablecoin transactions are processed and settled and whether market conditions have an impact, it added. Tomicah Tillemann, global head of policy at a crypto fund run by venture capital giant Andreessen Horowitz, commented:


ADVERTISEMENT

“It is significant and very consequential that we are witnessing early steps to create a regulatory framework around digital assets. That’s a big deal.”

The report, when released, will go to the President’s Working Group on Financial Markets. The body includes key agency heads such as Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and Securities and Exchange Commissioner Chair Gary Gensler.

In late July, Yellen called for urgency in regulating stablecoins after stating that they are not adequately supervised. Gary Gensler echoed the sentiment in early August, stating that regulators must act to protect investors from fraud.

Also, in late July, Acting Comptroller of the Currency, Michael Hsu, said regulators are looking into Tether’s commercial papers to see whether each USDT token was really backed by the equivalent of one U.S. dollar.

Tether has repeatedly issued assurances that its reserves are fully backed but has yet to produce a full independent audit.

Stablecoin Ecosystem Update

Tether remains the market leader with a current supply of 69.4 billion, according to the Tether Transparency report. This is close to the all-time high for USDT, which tapped 70 billion earlier this week.

Of that total, 36 billion or 51.8% is based on the Tron network, with 33.8 billion or 48.7% running on Ethereum. USDT supply has grown by 232% since the beginning of the year.

Rival stablecoin, USDC, from Circle currently has 29.3 billion in circulation after gaining 651% in terms of supply growth so far in 2021.

SPECIAL OFFER (Sponsored)

Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).

PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to get 50% free bonus on any deposit up to 1 BTC.

You Might Also Like:


PlatoAi. Web3 Reimagined. Data Intelligence Amplified.

Click here to access.

Source: https://cryptopotato.com/u-s-treasury-targets-stablecoins-in-latest-regulatory-risk-assessment/

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