A recent study conducted among 25 different cryptocurrency exchanges in Europe and the United States, showed that only 32% carry out a complete verification of the identity of its users. However, many of those sites that do not operate in accordance with the legislative base will have to radically change their operations in the near future, in 2019, will come into force the new European regulation to combat money laundering.
A study conducted by the analytical company P. A. ID Strategies showed that more than two thirds of European and American cryptocurrency exchanges do not work in accordance with the requirements of the KYC procedure. The study was carried out among 25 sites in both jurisdictions, and included a large company.
Of the 25 exchanges, selected in accordance with their transaction volume, 68% allow users to trade the cryptocurrency, and Fiat currency not verificarea its identity in compliance with KYC. In fact, traders can start trading, giving only your phone number or email.
This means that users who are bidding and do not comply with the KYC requirements, can easily exchange the cryptocurrency for the traditional money without any questions. John Devlin (John Devlin), chief analyst P. A. ID, commented on these figures:
«Cryptocurrency wallets and exchanges want to use the same confidence as the more traditional financial services. But for this they need to rise above the dubious reputation of cryptocurrency, which they won in the past and become a «model members» of the economy.»
Soon everything will change
The relatively soft approach of the regulators, who largely turned a blind eye to the verification of identity on crypto sites soon undergo major changes. In December 2017 the European Parliament Committee on economic and monetary Affairs agreed with the new regulation, which will require cryptocurrency exchanges and wallets to carry out a complete identification of its users.
The agreement is part of the fifth EU Directive to combat money laundering called AMLD5. It should enter into force in June 2019, exactly 18 months after the consent of the Committee.
Needless to say, if the exchanges are seen in money laundering, especially after they refuse to work in accordance with the new regulations, this can lead to substantial, if not irreparable damage to the brand.
All the better
If the industry of cryptocurrency exchanges wants to use the same user trust, which can boast a traditional exchange services, they must adhere to the same standards. However, while only 32% of the investigated stock exchanges embarked on the right path.
Future regulation could change the situation. Kalle Marsal (Kalle Marsal), chief operating officer of the company Mitek, which sells technology for identity verification, which ordered the study on P. A. ID., notes:
«Wallets and exchanges want to change the perception of permissiveness, and this is a relatively simple solution. The verification process of the individual with proper implementation can be simple for the customer and will not prevent registration. […] Introducing the advanced system, echoing cryptocurrency innovation, exchanges and wallets can be competitive and operate in accordance with regulatory requirements.»