For years, cryptocurrency has been linked with money laundering, with some alluding to cryptocoins being the preferred currency of narco and war lords.
However, Binance, the world’s largest crypto exchange, has voluntarily engaged in an initiative to eliminate money laundering on its platform. This week, the exchange platform has begun to cooperate with Chainalysis, a leading blockchain analysis company that evaluates suspicious transactions and addresses, to improve its AML system and to further legitimize the cryptocurrency sector.
“Cryptocurrency businesses of all sizes face the same core challenge: earning the trust of regulators, financial institutions and users. We expect many to follow Binance’s lead to build world-class AML compliance programs to satisfy regulators globally and build trust with major financial institutions,” Jonathan Levin, co-founder and COO of Chainalysis.
In 2018, some of the world’s most influential banks were cracked down for money laundering. Danske Bank laundered $243 billion from criminal groups, and Nordea Bank, the largest financial group in the Scandinavian region, was reported to have illicitly several payments from banks in the Baltic region.
With Know Your Customer (KYC) and Anti-Money Laundering (AML) systems integrated by cryptocurrency exchanges, it is extremely difficult for criminals to utilise digital assets to settle the transfer of illegal proceeds. With the institutional market of cryptocurrencies growing exponentially, the tightening of AML systems employed by public exchanges is expected to cement cryptocurrencies as a recognised asset class and the digital asset market as a properly regulated sector.
Wei Zhao, the CFO at Binance, said that maintaining the firm’s vision of increasing the worldwide free flow of money, the exchange will continue to adhere to regulatory mandates in the countries where it operates.
“By working with Chainalysis, we are able to continue building a foundational compliance program that enables the next phase of our growth. Our vision is to provide the infrastructure for a blockchain ecosystem and increase the freedom of money globally, while adhering to regulatory mandates in the countries we serve.”
During the 2017 bull market in which the valuation of the cryptocurrency market surged to $800 billion, the asset class obtained significant mainstream awareness in both countries that support crypto and regions that have established impractical regulatory frameworks to prevent local blockchain markets to flourish. In this time when governments are introducing increasing efforts to embrace crypto and blockchain businesses as a part of the 4th industrial revolution, voluntary initiatives by companies like Binance to legitimise the industry will ease governmental process in regulating and acknowledging the global market.
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