Cryptocurrency Exchanges: What are KYC, AML and CFT?

As cryptocurrencies have become increasingly popular, more and more moves to regulate them have been introduced. Most of these regulations target cryptocurrency exchanges due to the vital role that they play in the cryptocurrency market.

While there are many types of regulations that are being rolled out, the three that are definitely at the top of the list are KYC, AML, and CFT. Odds are you may have already heard about them – but what are they really all about?

“What is Know Your Customer (KYC)?”

Know Your Customer (KYC) regulations are designed to require that cryptocurrency exchanges verify the identity of their customers. The exact means through which that is accomplished can vary but normally involves gathering identification information such as full name, residential address, birth date, photo identification, bank statements, and so on.

Although it may seem tedious, KYC regulations are actually very important. They can help to prevent numerous crimes such as money laundering, identity theft, bribery, corruption and terrorism. Simply put while they do remove the anonymity of cryptocurrencies, they give it greater legitimacy.

“What is Anti-Money Laundering (AML)?”

Anti-Money Laundering (AML) regulations are really fairly self-explanatory. It consists of various procedures and laws designed to ensure that people aren’t able to generate income through illegal and illicit transactions. Some of the main activities that AML regulations aim to stem include tax evasion, corruption, market manipulation, and the trade of illicit goods.

In short, AML regulations are mainly to keep bad actors from taking advantage of cryptocurrencies. It should be noted that technically KYC regulations are part and parcel of AML too, but they serve a more specific purpose.

“What is Combating the Financing of Terrorism (CFT)?”

Combating the Financing of Terrorism (CFT) regulations are quite straightforward as well. Broadly speaking they encompass various investigative procedures and laws to cut off the flow of funds to terrorists.

The reason CFT regulation compliance is important in cryptocurrency exchanges is because many terrorist organizations have been known to take advantage of cryptocurrencies. Due to the anonymity of cryptocurrencies it is difficult to identify transactions and connect them to individuals.

How Regulations Benefit Cryptocurrency Markets

Although the anonymity of cryptocurrencies was one of its selling points when the market was in its infancy, the fact of the matter is that it has become one of its main weaknesses. It has led to the misuse of cryptocurrencies for illegal activities, and affected its overalls security as well.

In the long term, the introduction of regulations such as AML, KYC, and CFT will increase the legitimacy of cryptocurrencies. It will also make cryptocurrency exchanges more reliable and guarantee that they are above board and are operating legally.

Of course AML, KYC, and CFT regulations vary greatly in different jurisdictions, which can lead to other issues as well. The level of implementation required for compliance can differ and some the standards in some jurisdictions may be far more relaxed than others.

Overall it is a step in the right direction however, and will make a Bitcoin trading platform more transparent.

Final Words

All in all AML, KYC and CFT are essential to make sure that cryptocurrency exchanges operate, and are used, in a legal manner. Over the last few years the regulation of cryptocurrencies has generally revolved around them due to the role that they play.

In the future these regulations are likely to continue to evolve and becoming more widely implemented. They could end up being a big factor that determines whether or not cryptocurrencies are able to become more mainstream as time goes by.



*** BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated September 13, 2020

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

ONE of this year's Motley Fool Stock Picks Has Already quadrupled, ONE has tripled, and another TWO Have Already Doubled in just 8 months of of 2020!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's almost 5 years, 55 months and 110 stock picks. As of Friday, September 11, 2020 the Motley Fool's January 2 stock pick (TSLA) is up 333%, their March 19th pick (ZM) is up 209% in just 6 months, and another two have more than doubled. In addition, 6 of their 2019, 8 of their 2018, 8 of their 2016, 9 of theire 2017 and 13 of their 2016 picks have also doubled. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 135%. That beats the SP500 by an average of 95%. And that's even accounting for all of this COVID mess that has wreaked havoc on most stocks. BUT, the Fool has done so well because they have quickly identified stocks this year that will perform well in the post-COVID world. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.

  • CrowdStrike (CRWD) -- June 4, 2020 pick is already up 32%
  • Shopify (SHOP) – April 2, 2020 pick and it is already up 164%
  • Zoom Video (ZM) – March 19, 2020 pick and it is already up 209%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 41%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 333%
  • HubSpot (HUBS) picked December 5, 2019 and it is up 82%
  • Netflix (NFLX) picked November 21, 2019 and it is up 54%
  • Trade Desk (TTD) picked November 11, 2019 and up 117%
  • Zoom Video originally picked Oct 3 and it is up 398%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 105%

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. They also claim that since inception, their average pick is up 529% and now we believe them. You sure don’t want to risk missing out. Many analysts are saying that we have passed the bottom of this COVID crisis and stocks will recover quickly. So make sure you have the best stocks in your portfolio.

Normally the Fool service is priced at $199 per year but they are currently offering it for a NEW SUBSCRIBER DISCOUNT of just $99/year if you click this link

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



GET UP TO $1,000 IN FREE STOCK

WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)



Leave a Reply

Your email address will not be published. Required fields are marked *