The impact of cryptocurrencies in global economic activity in recent years has made them come under the eye of the authorities.
Many State governments have taken sides against the situation in an attempt to make clear the legality of the cryptocurrency trade among its residents.
Some states, such as China, have taken strict measures to curb the cryptocurrency trade in the country by prohibiting initial coin offerings and closing local exchange platforms.
However, in an ecosystem as global as cryptocurrencies, alternatives to these restrictions have been found, and several of the major exchanges located between Chinese borders have been moved to crypto-friendly places such as Hong Kong or Malta.
In the same way, Chinese investors have moved their funds to banks in these countries and traders have continued to operate in the cryptocurrency markets present in foreign exchanges combining the Tether stablecoin (USDT) with a VPN allowing the exchange of cryptocurrency to fiat and vice versa.
Given the proven inability to cease activity in the crypto markets and, with the aim of integrating it into the financial, legal and tax system of the States, many countries have opted to establish regulatory processes that favor good practices in the sector that, only with Bitcoin, it moves billions of USD per day.
KYC & AML
KYC and AML are two terms that are being heard a lot lately in the cryptocurrency environment.
Imagine going to work or traveling abroad without your identification documents. For cryptocurrency exchanges, that is equivalent to doing business with people who have not been personally investigated.
Although central banks do not regulate digital currencies, they are stored digitally through electronic identities, which gives their owners the opportunity to remain anonymous. This feature makes cryptocurrencies suspicious of being used in illegal activities such as terrorist financing, the purchase of drugs and weapons, as well as making them one of the favorite targets of hackers.
This is where the “Know your customer” (KYC) comes into play. The KYC is a process quite similar to the first time you opened your bank account in which you were probably asked to provide your personal information as identification.
The KYC serves as an identity control for the users of cryptocurrency trading platforms that can also operate with fiat currencies, allowing the exchange between both.
In order for exchanges and trading platforms to operate in countries such as the United States, the United Kingdom, Switzerland, Japan or the European Union, they must comply with their laws based on regulatory processes in which the KYC is mandatory. This serves to prevent fraud and criminal money transfers.
In addition, it provides benefits to users in terms of security and protection from theft of funds by sibyl attacks.
AML regulations in exchanges are also required by state laws in many countries and offer transparency in verifying that users of a platform are not participating in money laundering activities that can finance illegal activities.
For an AML system to be exhaustive, it must have incorporated in its database lists such as OFAC, KINPIN, FBI or CIA
Many of the exchages are implementing KYC and AML to be in accordance with state and local regulations. Trading platforms that do not do so will end up having legal problems that could be cause for closure and the funds of their users could be at risk.
Lescovex Exchange
https://lescovex.com has launched its smart contract issuance and cryptocurrency exchange platform that combines the largest number of fiat pairs in the blockchain ecosystem.
Lescovex has as main priority to offer a professional and quality service with strong levels of security and 24/7 user support that guarantee the best user experience for all the services of its platform. Its main goal is to comply with all the quality standards necessary to acquire the regulatory licenses of each region or nation. This is extremely necessary to be able to operate with security and guarantees in any regulatory framework. This will mark a clear advantage that will open the doors to offer a greater number of financial products to its users.
Registering on the platform entails compliance with an exhaustive KYC process configured with the most advanced technology that allows its users to do it in a simple, intuitive way and in just a few minutes.
With this evolution towards the regulation and adoption of the cryptocurrency sector by governments and their regulatory entities, it is expected that this economic system will increasingly move away from labels associated with low transparency, illegality and fraud.
This has caused that companies like Google have prohibited ads for their promotion considering them unsafe and transparent.