Facebook Registers New Fintech Firm in Switzerland

Social media giant Facebook has apparently formed a new financial tech firm, Libra Networks LLC, according to a filing on the Geneva Commercial Register.

Libra Networks was registered in Geneva on May 2 by Facebook Global Holdings II LLC. Per the official filing the firm provides:

“…services in the fields of finance and technology, as well as the development and production of software and related infrastructure, in particular in connection with investment activities, the operation of payments, financing, identity management, data analysis, big data, blockchain and other technologies.”

Facebook registered the trademark “Libra” with the United States Patent and Trademark Office back in June, which was reportedly part of its secretretive in-house crypto project. Facebook has also hired two cryptocurrency compliance experts who formerly worked at the major crypto exchange Coinbase as reported by Cointelegraph in May.

Anonymous sources have claimed that Facebook could release a native stablecoin some time in the third quarter of 2019.

At the recent crypto conference Consensus 2019, Polychain Capital CEO Olaf Carlson-Wee commented that he thinks the rumored stablecoin should be built on a public, open source infrastructure. Carlson-Wee thinks it would be in the self-interest of the company given recent controversies surrounding the social media platform:

“I think given all the problems that Facebook has had with policing their platform and things like that, I think that the strategic move for Facebook would actually be to build public infrastructure. And that public infrastructure could be incorporated onto all the Facebook platforms, which of course are proprietary. But that public infrastructure, if they don’t try to own it, I think that’s where they will have the most success.”

Bitfinex Crypto Exchange to Debut New Exchange Utility Token

Major cryptocurrency exchange Bitfinex has unveiled its exchange utility token UNUS SED LEO, in a press release on May 17.

The token will be useable for a variety of exchange-based activities and will begin trading on Bitfinex on May 20 against tether (USDT), bitcoin (BTC), ether (ETH), U.S. dollars and EOS pairs.

The whitepaper for the project, published on May 10, describes LEO as “a utility token at the heart of the iFinex ecosystem.” iFinex is the parent company of Bitfinex. iFinex purports that it provides a stronger and more independent infrastructure, having migrated from Amazon Web Services to a self-designed data center.

Bitfinex reportedly raised 1 billion tether (USDT) worth of U.S. dollars, bitcoin and tether for the token during its initial exchange offering.

As recently reported by Cointelegraph, the New York Supreme Court recently allowed Bitfinex and associated stablecoin project Tether to continue business during proceedings brought against it by the New York Attorney General (NYAG).

The NYAG originally claimed that Bitfinex lost $850 million and subsequently used funds from Tether to secretly cover the loss. Bitfinex responded to the allegations, saying the NYAG claims were inaccurate. The exchange said it would fight the case in court:

“And rest assured that we will vigorously challenge the false assertions made by the New York Attorney General’s office in their filing… In particular, we want to assure you that the allegation that we have ‘lost’ $850 million is categorically false.”

ABB Launches Blockchain Pilot for Solar Energy Sector

International electrical engineering company ABB has rolled out a blockchain pilot to explore how the technology could promote the role of solar energy in peer-to-peer (p2p) energy trading, technology-focused media outlet PV Tech reported on May 16.

To implement the project, ABB collaborated with Italian energy aggregator Evolvere to deploy a blockchain it jointly developed with blockchain-based platform Prosume. The pilot will purportedly enable transparent and secure p2p energy transactions, as well research blockchain’s role in the smart grids market.

ABB told PV Tech that the project’s objective is to make blockchain-ready inverters so energy market participants can reduce both capital and operational expenditure costs. Giampiero Frisio, head of ABB’s smart power business, said, “the Evolvere project has allowed us to develop viable and proven solutions for the market in anticipation of new dynamics and regulatory frameworks coming in to place for blockchain technology.”

ABB Group is involved in several “smart” and renewable energy projects, including smart gas and electric cars. ABB has operations in Europe, North and South America, Asia, Africa and Australia. In 2018, the firm had an operating revenue of over $28.5 billion.

Blockchain has been gaining traction in the energy sector around the world. Earlier this month, American blockchain startup Data Gumbo Corp. raised $6 million from major energy companies, including the venture wing of Saudi Arabian national petroleum and natural gas company Saudi Aramco. The investors purportedly expect Data Gumbo’s blockchain-as-a-service platform to improve oil and gas supply chains by eliminating disputes and enabling automated payments.

In April, Austria’s largest energy provider, Wien Energie, developed a blockchain-driven fridge in partnership with tech giant Bosch. The main goal behind the project is to increase consumer interest in the sustainable consumption of energy. A blockchain solution in this case allows one to choose the source of the energy, be that a solar panel or a wind power plant.

Venezuela and Russia Discuss Mutual Trades in Petro and Russian Ruble: Report

Venezuela is considering to close mutual trade settlements with Russia using the ruble, Russian government-backed TV channel RT reports on May 17.

Venezuela’s representative to the United Nations in Geneva Jorge Valero said they are also discussing uses for the state-owned Petro (PTR) cryptocurrency.

Valero reportedly revealed that Venezuelan authorities are now working with Russia to find opportunities for eliminating the use of the United States dollar in trade deals between the two countries.

As such, the two countries’ authorities are purportedly mulling the use of the Russian ruble, as well as Venezuela’s oil-backed Petro digital currency, a controversial project that was first launched in February 2018.

Amid the economic collapse in Venezuela that is worsened amid new U.S. sanctions, as well as the ongoing presidential crisis, Valero also expressed his hopes of getting Russian support in restructuring Venezuela’s foreign debt.

The Venezuelan Petro, which was designed to combat poverty and hyperinflation, was criticized by global experts for lacking global exposure. Some also questioned whether the coin was actually backed with Venezuelan oil, as reported by Cointelegraph. Following the launch of the coin, U.S. President Donald Trump banned American citizens from purchasing Petro in March 2018.

Recently, the U.S. Treasury Department added Moscow-based bank Evrofinance Mosnarbank to its sanctions list due to an allegation that the bank represented a “primary international financial institution willing to finance” Petro. In the statement, the Treasury described the Petro as a failed project attempted to help Venezuela avoid U.S. financial sanctions.

In April, an adviser to the President of Russia proposed to adopt a digital currency in Crimea to attract investors and avoid sanctions.

Bitstamp Starts Investigation After Large BTC Sell Leads to $250 Mln Liquidated on BitMEX

Major crypto exchange Bitstamp has launched an investigation after a large bitcoin (BTC) sell order heavily impacted its order book, as the firm announced in a tweet on May 17.

Bitstamp reported an execution of a large sell order in BTC to United States dollars (USD) on its platform today, as the exchange wrote earlier today.

While the company has not specified the details of the transaction, the price of bitcoin had plummeted about 20% from around $7,800 to as low as $6,250 in less than 30 minutes earlier on the day, according to data from trading analytics platform TradingView. Briefly after the crash, bitcoin’s price has surged back, but stabilized below $7,400.

Bitstamp reported that their platform was operating properly as designed.

BTC/USD chart on Bitstamp on May 17

BTC/USD chart on Bitstamp on May 17. Source: TradingView

According to crypto news outlet The Block, the sell order on Bitstamp led to a liquidation of $250 million long positions on the BitMEX exchange, which further resulted in price declines on other crypto exchanges.

As reported by crypto publication Forklog, the sell order on Bitstamp included 5,000 bitcoins sold at $6,200. Some people in crypto community suggested that the sell order could be made by mistake, with the order’s owner having been meant to sell his bitcoin at $8,200 instead of $6,200.

Bitcoin is down around 10% over the past 24 hours to trade at $7,166 at press time after trading at around $7,800 yesterday, while 19 out of the top 20 cryptos by market cap are seeing major losses, according to data from CoinMarketCap.

Gaining Mass Adoption: Blockchain Platform Converts Users Fame Into Coffee and Clothes

Mithril, a decentralized platform that rewards content creators on social networks, told Cointelegraph that they are working on expanding the acceptance of its MITH token merchant network into different categories, such as coffee shops, restaurants, sports clothing and adult entertainment platforms.

For instance, the team has announced a partnership with AccuPass, a Taiwanese ticket aggregator. According to Mithril, users are now able to purchase concert tickets with its tokens. In March 2019, SWAG, an adult entertainment network that connects amateur porn models and their fans, with more than 1.5 million registered users, started to accept MITH as a payment for its services. In addition, the company wrote that they are “developing strategic partnerships with several pioneer theaters in Taiwan.”

For the company, it is an important milestone in its adoption curve, and a possibility to reaffirm its brand promises, the team notes.

Citing “deep connections” of Mithril’s founder, Jeffrey Huang, in the Asian entertainment industry, a company spokesman told Cointelegraph that it will continue offering users the possibility to spend their MITH tokens on celebrity-related services and events.

Brought to life by the rise of influencer culture phenomenon, Mithril promises its content creating users “followers, fortune and fame.” This association with successful artists may help to boost its standing and exposure, the team hopes.

Mithril is available here

Instant liquidity

In a move to cater to speculators, Mithril started by creating a mechanism called VAULT, an all-dimensional vault for managing digital assets. To enable legally compliant, large withdrawals from VAULT, Know Your Customer (KYC) tools went live on the Mithril platform on April, 11.

The company said it will continue to “polish” VAULT’s mechanics in Q2 2019. It intends to roll out a new “VAULT Send” feature that allows users to easily send crypto to anyone they want, within seconds.

Migration to Binance Chain

In April, Mithril became one of the first blockchain projects to move to Binance Chain, the new decentralized crypto exchange created by the Binance community. Mithril cites improved “speed, security, and user friendliness on the new Binance DEX platform” as the principal motives of the move.

“As Mithril continues to gain real-world usage through Mithril Merchant Network partners in media and entertainment, food and beverage, retail clothing, and events management,” such benefits “have become crucial to the success of our ecosystem,” the team adds.

Social mining

Mithril technology is based on the concept of “social mining.” Social network platform users acquire MITH tokens by producing and uploading content on social media, as well as interacting with other users on platforms that support this social mining technology.  

Currently, social mining is supported on Yeemos, an anonymous social platform, and PiePie (formerly LIT), an emerging crypto-based social network app, which was created by Mithril partner company M17 Entertainment Media. “It is like Instagram, but they give you crypto for sharing content pieces,” one PiePie user from Latin America said in a review on the Google Play store.

Mithril is generally targeted at aspiring internet celebrities wishing to monetize their popularity. The Mithril project started in Q4 2017 — it held no initial coin offering and offered no airdrops or bounties, instead distributing its tokens in a private sale.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

Cornell Uni’s Emin Gun Sirer Debuts Ava Blockchain Following $6 Million Investment

Emin Gun Sirer, a professor at Cornell University and a major global blockchain expert, will launch his own cryptocurrency and blockchain network, Bloomberg reported on May 16.

Sirer, the creator of the first crypto based on proof-of-work (PoW) — Karma System — is now planning to launch a blockchain network that he touts as running as many transactions per second as payment giant Visa.

Having raised $6 million from major investors such as Andreessen Horowitz, Polychain and MetaStable in February, Sirer’s Ava Labs has reportedly launched a private test version of the Ava network on May 16, while the public launch is expected to be rolled out soon. The first coins are set to be issued once the blockchain is available to the public, the report notes.

Sirer stated that the Ava network will obtain 1.35 second confirmation latency and purportedly enable applications “that aren’t even possible yet,” adding that his ultimate goal is to record every single certificate on the blockchain.

Sirer, 47, is the co-director of the Initiative for Cryptocurrencies and Smart Contracts at Cornell University. He is known for his selective approach to crypto based on the actual use of various cryptocurrencies. As such, Sirer has urged that people should only invest in and hold coins which they believe “will be used, extensively, in the long run,” arguing that cryptos that are bought on hype “are pure speculation.”

Sirer’s stance on crypto was recently echoed by Galaxy Digital CEO Michael Novogratz, who claimed that each altcoin will have prove themselves by providing a certain use case. Speaking at ConsenSys’ recent Ethereal Summit, Novogratz argued that if “bitcoin is gonna win this store of value, everything else needs to be used for something.”

Cointelegraph recently interviewed Sirer about his views on the future of crypto from an academic point of view concerning the technology.

What Crypto Exchanges Do to Comply With KYC, AML and CFT Regulations

While it’s possible to buy top cryptocurrencies like bitcoin (BTC) and ether (ETH) in the over-the-counter (OTC) market, most people will need an exchange in order to buy other altcoins. Exchanges are simply an important component of the system that makes the crypto market tick. Regulators around the world have identified this, which is why regulatory moves have primarily targeted exchanges. Regulators want to be sure that exchanges employ the best security practices as well as measures — Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT), for instance — that discourage illicit transactions and improve account/wallet security.

Some exchanges do take their compliance to those measures seriously. For example, in the aftermath of the Binance hack on May 7, when around 7,074 bitcoins (worth $40 million on the day) were stolen, the company’s founder and CEO, Changpeng Zhao, announced that a significant security update will be conducted that will also include an upgrade to the KYC measures:

“We are making significant changes to the API, 2FA, and withdrawal validation areas, which was an area exploited by hackers during this incident. We are improving our risk management, user behavior analysis, and KYC procedures.”

So, let’s break down if such a stance over compliance with measures like KYC, AML and CFT is common among top cryptocurrency exchanges, and how much of an effect they have on the market and its participants.

What are KYC, AML and CFT

Each country has its laws governing KYC, AML and CFT measures. However, these laws do not come with specific standards, mainly because regulators want financial institutions to do all they can to reduce risks.

“The reasoning seems to be that if banks get clear guidelines on what constitutes adequate KYC they will never look any further than the minimum requirements,” John Callahan, chief technology officer at Veridium, an identity and access management software company, wrote in Forbes.

Know Your Customer

Know Your Customer, refers to a set of procedures and process that a company employs to confirm the identity of its user or customer. The robustness of KYC procedures varies across companies and jurisdictions. However, KYC fundamentally involves the collection and verification of a customer’s means of identification — including government-issued identity cards, phone numbers, a physical address, an email address and a utility bill, to name a few.

Anti-Money Laundering

Anti-Money Laundering measures are a set of procedures, laws and regulations created to end income generation practices through illegal activities. Some of them include tax evasion, market manipulation, public fund misappropriation, trade of illicit goods and other activities of this kind.

AML regulations require financial institutions to continuously conduct due-diligence procedures to detect and prevent malicious activities.

Anti-Money Laundering

The crypto industry has already been cited as facilitating a “rise of a new, high-tech era of virtual money laundering,” with cryptocurrency gambling sites reported by blockchain research house CipherTrace as being a common money laundering tool. In addition, Jamal El-Hindi, the former acting director of the Financial Crimes Enforcement Commission (FinCEN), a part of the United States Department of Treasury, hinted that AML compliance will be fundamental to the stability of crypto exchanges in the coming years:

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate US AML laws.”

Combating the Financing of Terrorism (CFT)

Combating the Financing of Terrorism refers to the set of procedures aimed at investigating, dissecting, discouraging and blocking sources of funding intended for activities that realize religious, ideological or political goals through violence, or its threat thereof, against civilians. These procedures provide law enforcement agencies with an alternative, and potentially effective way to track and block terrorist activities.

Yaya Fanusie, the director of analysis for the U.S. Foundation for Defense of Democracies Center (FDD), earlier in September 2018, told the U.S. Congress that terrorist organizations aren’t using cryptocurrency as a funding vehicle. However, the U.S. House of Representatives, on Sept. 26, passed a bill that would establish a task force to fight the use of cryptocurrencies by terrorist groups.

How crypto exchanges approach KYC, AML and CFT compliance

As stated earlier, the process of regulatory compliance for AML and CFT involves KYC throughout transaction lifecycles. The KYC process is generally divided into four levels, namely:

  • Customer acceptance policy (CAP), which is the stage where a company determines and documents the demographics of its desired customers.
  • Customer identification program (CIP), which is the stage where the company confirms that the identity of a (potential) customer matches its CAP.
  • Continuous monitoring of transactions to ensure regulatory compliance, identification of suspicious activities and risk management.
  • Risk management

Based on the information available, it can be examined how exchanges handle these stages. Crypto exchanges will be divided into two groups namely the “fiat-to-crypto” exchanges and “crypto-to-crypto” exchanges. Fiat-to-crypto exchanges are the gates for new fiat money to enter the cryptocurrency market. These exchanges allow users to exchange fiat currencies like dollars for bitcoin, ether or any other supported cryptocurrency. Crypto-to-crypto exchanges, on the other hand, primarily allow users to exchange one cryptocurrency for another.

Fiat-to-crypto exchanges

A few top fiat-to-crypto exchanges include Coinbase, Coinbase Pro, Gemini, Bittrex, Kraken, Bitfinex and Bitstamp.

Fiat-to-crypto exchanges

Fiat-to-crypto exchanges typically perform at least some level of KYC because they deal with fiat money. This forces them to conduct business with banks and other traditional financial institutions, most of whom conduct KYC procedures before doing business with any entities.

Coinbase

Coinbase is a licenced crypto exchange based in the U.S. A full list of the licenses it holds is here. All that the exchange requires to open an account is a full name, an email address and a password. While this means that anyone from anywhere in the world can store, send and receive cryptocurrencies using a basic Coinbase account, ID verification is required to buy and sell cryptocurrency in the 33 countries it supports.

For its KYC, Coinbase chose Jumio’s digital identity solution Netverify in an attempt to be regulatory compliant while still delivering a smooth customer experience. In a bid to further mollify regulators, the company hired former New York Stock Exchange executive Peter Elkins to build the Coinbase Trade Surveillance Program, an initiative to monitor the markets with the aim to weed out bad actors.

Gemini

Also licensed by the U.S. government, Gemini, unlike Coinbase, conducts KYC before allowing anyone to use its platform. On its user agreement page, Gemini states at least 13 regulations — including FinCEN, AML and CTF regulations — to which the users of its platform must be compliant. The exchange was launched in 2014 by brothers Cameron and Tyler Winklevoss.
At the start of the second quarter of 2018, a few months before Coinbase’s trade surveillance reports surfaced, Gemini partnered with U.S.-based stock exchange Nasdaq, which is one of the two largest exchanges in the world, for the deployment of Nasdaq’s SMARTS Market Surveillance technology to track market manipulations and fraudulent trades. The surveillance moves from both Gemini and Coinbase put them in the third stage of the KYC process.

Bitstamp

Bitstamp requires ID and address verification before users can start trading on the platform. In the wake of surged interest in bitcoin, the exchange partnered with Onfido in February 2018, a digital identity verification provider, to handle its KYC to the end in order to make the customer onboarding process frictionless. Bitstamp was originally founded in Slovenia in 2011, but moved to the United Kingdom in 2013, and then to Luxembourg in 2016.

On Nov. 5, Bitstamp chose Cinnober’s crypto trading system for its exchange. Cinnober claims that its trading solution is built for regulatory compliance. The solution also employs Irisium’s market surveillance technology for risk management. Cinnober boasts a list of customers, including the NYSE, the London Stock Exchange, Euronext, and the Johannesburg Stock Exchange, to name a few.

Bitfinex

Developed by fintech company iFinex, Bitfinex allows crypto users to open an account and immediately deposit, trade and withdraw crypto without identity verification. However, verification of a phone number, a residential address, two forms of government-issued ID and a bank statement is required to deposit and trade fiat currencies.

Earlier in the year, Bitfinex employed Irisium’s market surveillance technology to detect fraudulent behavior on its exchange. Bitfinex is based in Hong Kong.

Bittrex

Bittrex requires ID verification before allowing users to deposit, trade or withdraw cryptocurrencies. However, other than having a user agreement page that says its operations comply with KYC, AML and CTF policies — as does every other exchange — it is unknown if the exchange employs a market surveillance technology or plans to do so.

Kraken

Kraken launched following two years of product development and beta testing, making it one of the oldest crypto exchanges. It has five tiers of verification (tier 0 to 4) requirements, depending on users’ intent to use their account. Kraken founder Jesse Powell decided to build the exchange after seeing the struggles of the then-largest — but now defunct — crypto exchange Mt. Gox.

Kraken

Unlike Gemini and Coinbase, Kraken doesn’t appear to have any publicized surveillance program. All that is known comes from a Kraken blog post that was issued in response to the New York attorney general’s questionnaire. The company said:

“We currently employ nearly 200 people (more than 25% of the company) in compliance-related functions. As of Q1 2018, we are processing more than 1 law enforcement request per day, seven days a week.”

At the end of the second quarter of this year, a Bloomberg report called out irregularities involving certain tether trades on the Kraken exchange. John Griffin, a professor of finance at the University of Texas, told Bloomberg that the irregularities noticed are “suggestive of wash trading.” This technique is sometimes employed by traders, who act as both seller and buyer in a given transaction, to give a false impression of supply and demand. This act in itself is illegal. Kraken discredited the content of the report in a blog post. “It’s not clear what harm could come from wash trading of a pegged asset against its peg,” Kraken wrote.

Crypto-to-crypto exchanges

Based on data from CoinMarketCap, top crypto-to-crypto exchanges include OKEx, Binance, Huobi, HitBTC, Bibox, ZB.com, Coinbene and LBank.

Crypto-to-crypto exchanges

Binance

Binance, being a pure cryptocurrency exchange, isn’t as exposed to regulations. Therefore, it allows withdrawals of up to 2 BTC per day without any form of ID verification. For withdrawals up to 100 BTC per day, it requires photo ID verification.

OKEx

OKEx, which partially allows fiat trades, has three levels of verification. Level 1 users have a transaction limit of $10,000 per order or $2,000 for fiat trades, and are required to provide a government-issued ID during verification. Its level 2 allows for trades over $10,000, and requires document verification. Level 3 is for trades above $200,000 and involves video verification.

HitBTC

HitBTC doesn’t perform any form of ID verification at account opening. Users can deposit and trade crypto without going through any KYC procedures. However, the exchange advises users to verify their identity by sending in the usual KYC documents, including bank documents, to its compliance department via email to “avoid eventual verification procedure in the future.” Users have taken to a number of social media channels to complain that HitBTC allegedly limited their accounts, with the exchange operator asking them to verify their identities.

Huobi

Huobi doesn’t appear to require any KYC documents before allowing users to trade, but it does have an ID verification section in the settings area of a user’s account. It appears to only enforce KYC when users reach a certain account usage limit. In addition, Huobi has different withdrawal limits for verified and unverified users.

Bibox

Bibox allows users to trade up to 2 BTC per day without any form of KYC verification. For trades up to 20 BTC per day, it requires a passport verification. On its website, Bibox advises users who want a higher limit to reach out to its support team via email. All that is required to deposit funds and start trading with Bibox are account security measures, including SMS and Google authentication.

Should crypto exchanges take KYC seriously?

Put simply, similar to fiat-to-crypto exchanges, the top crypto-to-crypto exchanges, as determined by their 30-day volume on CoinMarketCap, have some sort of KYC policy that they enforce at different stages. However, many of them haven’t been proactive about compliance.

“To gain respect and empathy from regulators, crypto exchanges need to be proactive about compliance,”  Tony Mackay, who recently launched the Kryptos-X exchange, said. He went on:

“At the minimum, you want to get the on-boarding stage right, even if the crypto market is currently under-regulated. You also want to ensure that your user registration system can detect and deter criminal activities, using the expertise of best-in-class KYC/AML providers.”

Also, unlike their fiat-to-crypto counterparts, crypto-to-crypto exchanges — except for Binance — haven’t been reported as monitoring or tracking transactions to detect market manipulation or fraudulent behaviors.

Should crypto exchanges take KYC seriously?

In October, Binance partnered with Chainalysis, a compliance and investigation company catering to the cryptocurrency space. As part of the partnership, Chainalysis did a global roll-out of its compliance solution, which has a Know Your Transaction (KYT) feature. KYT is a real-time transaction monitoring solution for cryptocurrencies. U.S. agencies — including the IRS and FBI — are using Chainalysis’ solution to track cryptocurrency transactions.

Is it worth playing by the rules?

A recent report from P.A.ID Strategies, a payments and identity security consulting firm, found that the majority of crypto exchanges “lack sufficient background checks.”

It also claims that exchanges, at best, take a reactive approach to being compliant. Only a few have set up a system for monitoring behaviors and appear prepared to deal with regulators despite the under-regulation of the industry.

A recent emerging trend in the crypto space has been that of exchanges closing their offices in highly regulated jurisdictions and setting up shop in jurisdictions — such as Malta — where the local laws are “crypto friendly.” Binance and OKEx are the most notable examples.

For some crypto firms compliance is a double-edged sword in that on one side, firms ensure that no illicit activity is conducted on their platforms, while potentially compromising on the notion of decentralization on the other side.

In June 2019, new Financial Action Task Force (FATF) guidelines will be imposed that govern AML and CFT activities. The announcement from February states:

“Countries should ensure that VASPs [virtual asset service providers] are subject to adequate regulation and supervision or monitoring for AML/CFT and are effectively implementing the relevant FATF Recommendations, to mitigate money laundering and terrorist financing risks emerging from virtual assets. VASPs should be subject to effective systems for monitoring and ensuring compliance with national AML/CFT requirements.”

There are many who disagree with the tightening of controls, saying that, first of all, it would be difficult to set up domestic regulatory bodies, and in the meantime, companies may suffer as they will become overburden by reporting.

It is also not always possible to know the identity of the beneficiary, whom the destination wallet belongs to and what type of a wallet it is, according to Chainalysis. The company states that it would be more beneficial to collect wallet addresses of bad actors instead of user’s personal information.

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