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Study shows crypto companies’ non-compliance for KYC


CipherTrace discovered the shocking revelation that more than 50% of cryptocurrency exchanges have weak or no identity verification system

The study showed that the regions most affected with limited adherence to regulations were Europe and the USA. The analysis companies studied more than 800 scholarships market maker centralized, decentralized and automated.

The results of the study

According to CipherTrace, 56% of the cases studied were not in compliance with the guidelines of the Know your customer (KYC). The study found that the largest number of non-compliant exchanges were in Europe, possibly due to the fact that there are more regulations to display than other territories. In addition, two-thirds of all European virtual asset service providers experienced poor KYC practices.

Russia, the United Kingdom and the United States lead in terms of countries with the highest number of cases with poor KYC adherence. CipherTrace also revealed that most cryptocurrency exchanges do not even bother to indicate their country of origin on their T & Cs.

An impressive 85% of these exchanges have a poor KYC structure, which makes it suspect that the omission of their origin is intentional. The deliberate omission is to help them avoid compliance with AML regulations.

Seychelles has once again made headlines for its notoriety in money laundering. 70% of cryptocurrencies registered in the island country adhere little to KYC guidelines.

Point of contention on DeFi regulation

The question of whether DeFi projects, which provide financial services, should be subject to similar regulations, was also raised in the report.

Valerie Szczepanik, the SEC’s Crypto Czar, spoke on the subject earlier this month, saying: “These are all financial activities and are probably already subject to several laws, including securities, potentially banking and lending law – definitely AML / CTF laws ”.

According to Dave Jevans of CipherTrace, the DeFi protocols would show resistance against regulatory compliance. “From what we’ve experienced in the past few months, they don’t want to have anything to do with KYC.”He added that they would eventually have no choice but to join.

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