A research startup named Coinfirm has conducted a survey and studied 2016 cryptocurrency exchanges around the world, in which it has found that 69 percent of these do not follow a strict “complete and transparent” KYC policy. The study has also revealed that a mere 26 percent of crypto exchanges studied by the company was following a “high” level of AML policy. These exchanges follow procedures like keeping track of ongoing transaction, monitoring active transaction and having an in-house staff which is experienced in AML.
Crypto is all about decentralized operations and non-intervention; hence anonymity can be considered as an obvious feature, but this feature creates issues in the system and security is at stake. This feature has the potential to create problems for businesses and assist in criminal activities. The CEO of Coinfirm Pawel Kuskowski said to one media website that many such activities demand nothing but a crypto wallet address to get started.
Coinfirm said that considering these factors a known crypto exchange named Binance is at a higher risk and is exposed to anonymous activities. This crypto exchange is allowed deposits and withdrawals of assets/funds which are lower than the worth of 2 bitcoin, without making it mandatory to go through the KYC drill.
The report gave a few names of exchanges which are having a lower risk- Gemini, Coinsquare, and Poloniex, among a few other. The report said these exchanges have a strict KYC policy.
The CEO said, “It’s perceived as a UK entity, but it’s not really a UK entity,” he said as a hypothetical example. “In a lot of these situations, you would have the entity that is transmitting money, especially fiat, that was actually an entity between the contracting party and the sender.”
This can be linked to another study which was published recently by Bitwise Asset Management. The study claimed that around 95 percent of the reported bitcoin trading volume was a farce. It usually involved the interference of bots or false statistics provided by from unregulated exchanges.
However, despite of lacking in KYC policy earlier, Binance seems to be taking steps to boost its KYC compliance policies. Recently, the exchange made an announcement that it is partnering with one analytics firm named IdentityMind in order to update and improve its current data protection security measures.