Since the launch of the cryptocurrency industry, one of the major issues has been the KYC and AML compliance of the cryptocurrency entities. As the majority of the cryptocurrency exchanges are decentralized, this is why they are notorious for not complying with the regulatory policies.
It is the cryptocurrency exchanges that on many occasions have failed to comply with policies including Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulations.
However, there are a few major reasons why cryptocurrency exchanges are failing to comply with these regulations. The very first factor is that the cryptocurrency industry is spread across the globe. Cryptocurrency exchanges provide their services in different countries and continents. However, each country either has its own regulatory infrastructure that it requires for the exchanges to fall or none at all.
Then there are countries/regions whose regulations are so strict that it becomes almost impossible for the exchanges to follow such regulations. Therefore, to handle such situations, the exchanges prefer relocating to different areas or countries such as the Cayman Islands or Malta where the regulations are crypto-friendly.
However, as the cryptocurrency industry has grown and matured, so has the crypto-entities’ realization of the importance of AML and KYC policies. This is the reason why the majority of the cryptocurrency exchanges are now becoming fully compliant with KYC and AML regulations.
As a result, exchanges or entities that have bad intentions in the crypto-space are filtered out and are met with justice.
With the passage of time, there have been many cryptocurrency reporting sites that have emerged in the crypto-industry. These entities are responsible for running checks on new and old cryptocurrency exchanges. Then these exchanges share their findings with the entire crypto-community. The same information gets picked up by the legal authorities that are responsible for keeping the crypto-industry intact.
Some of the most prominent firms that are known for crypto-reporting include CipherBlade, CipherTrace, and Chainalysis. These blockchain analyzing firms are known for having a granular understanding of the blockchain ecosystem.
Although it is expected of small-time exchanges evading or not complying with the KYC and AML policies, it would come as a shock if the same behavior is displayed by major crypto-exchanges.
Just recently, the co-founder and the lead investigator, Rich Sanders, at CipherBlade has dropped alarming news on the crypto-users. Through his Twitter account, he has informed his followers that KuCoin and Huobi are the exchanges that have failed to comply with KYC policies.
He stated that to test the KYC regulatory compliance on both exchanges, on one side, he made an account with the username Borat and on the other as Taylor Swift. He stated that he was easily able to register his profile on both exchanges without any issues.