As a global cryptocurrency exchange facing increasing scrutiny from regulators, Binance has introduced a user verification policy for asset and institutional protection from criminal activity.
Binance introduces ‘Intermediate Verification’
KYC regulations have become essential for crypto exchanges to comply with, if they want to continue gaining mainstream approval, and comply with regulators. Recently, Kraken announced tighter KYC restrictions in the U.S. for margin traders, and Binance is looking to strengthen its user protection by enforcing user verification. Much like financial service providers are required by regulators globally to have KYC policies to curb illegal activities, Binance is seeking to be proactive as a crypto exchange that handles significant assets on behalf of its users.
In order for users to now access Binance’s product offerings and services, including deposits, trades and withdrawals, an intermediate verification step is required. This kind of step is important for institutions that handle significant assets on behalf of their users, so that they have knowledge of their users and who their users do business with. This knowledge protects both the institution and the assets.
Improved KYC improves Binance profile
Binance sees this as a step towards boosting its reputation with banks and other partners, by increasing assurance that global exchanges such as theirs are able to operate safely. The initial barrier posed by an intermediate verification step, which requests, among other things, the user’s ID document and country of origin, acts as a deterrent to would-be money-launderers and other criminal elements. Binance recently appointed Greg Monahan as head of money laundering reporting, in an effort to bolster Binance’s international investigation and anti-money laundering operations.
Wider benefits for crypto
It is helpful to view Binance’s user verification as a step in the positive direction for the entire crypto industry. As more fiat currency and mainstream users flow into cryptocurrency, regulator’s ears’ have perked up, causing them to insist that centralized platforms that handle crypto assets must be able to prevent illegal funds from going into their system. Thus, compliance on the part of the platform can only benefit the crypto industry, by improving user trust and adoption of crypto purchases and payments. In January 2021, the BitMEX exchange imposed similar regulations on its users, after facing legal action from American authorities.
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