Deribit Bitcoin Futures Exchange Prepares to Enforce KYC in Line With AMLD5

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Cryptocurrency traders using the Netherlands-based Bitcoin futures and options trading platform, Deribit, may soon have to undergo rigorous KYC and AML procedures.

The change will come into effect starting early Jan 2020 and are in line with the guidelines prescribed by the fifth EU Anti-Money Laundering Directive (AMLD 5).

AMLD5 will be enforceable in all European Union member states starting Jan 10, 2020.

Deribit Moves to Mandatory KYC/AML Guidelines

Up until now, new users on Deribit’s Bitcoin futures and options trading platform didn’t have to undergo any stringent verification process. Even users in countries where the company does not officially offer services could easily bypass geofencing by simply using a VPN.

However, in a recent interview with the Flippening Podcast, Deribit CEO John Jansen confirmed that things are going to undergo certain changes in anticipation of the AMLD5.

He was referring to the new policy framework proposed by De Nederlandsche Bank (DNB), the apex banking authority on the company’s home turf. Per the new framework, all Dutch and EU-based businesses offering cryptocurrency-related services in the Netherlands must register with the DNB.

This is to ensure better supervision of the country’s homegrown cryptocurrency industry, the DBB confirmed earlier in Sep 2019.

No Changes to the Regulatory Landscape for Cryptocurrencies

Dutch authorities, unlike their peer EU members, are yet to introduce a regulatory framework to govern the country’s burgeoning cryptocurrency sector. Neither does the DBB seem to have any plans to change that status quo anytime soon in the immediate future, despite the new guidelines enforcing mandatory registrations.

That means Deribit will continue to operate under the existing laws and regulations governing the broader financial services sector.

However, more stringent supervision also means that any company offering cryptocurrency trading, deposit, or conversion services in the Netherlands will now have to be able to demonstrate to the authorities that their services are not being used for illegal operation of any kind. The Dutch government maintains that the move was necessary to ensure that the relative anonymity provided by digital assets such as Bitcoin is not exploited for illegal activities such as terrorism funding or money laundering.

But that’s the extent of it — companies offering cryptocurrency-related services will be asked about the type of services they offer, the contact details of the office headquarters and company leadership, and other basic questions.

Outside of the existing regulations governing the broader financial sector, the new supervision does not introduce any additional measures to ensure that these platforms are well-organized and do not breach the trust customers and investors put on them.

On a related note, the Deribit CEO also ruled out the possibility of officially extending the company’s services to the United States. Apparently, he doesn’t want to inadvertently breach any U.S. securities law that could potentially trigger a harsh response from the U.S. government.

Meanwhile, how do you assess the potential impact of the new AMLD5’s on cryptocurrency services across the world? Let us know in the comments below.

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Shilpa is a network engineer and management graduate who is deeply passionate about artificial intelligence and blockchain technology. She has been associated with several leading science & tech publications throughout her career as a journalist and columnist. Full-time foodie, semi-skilled musician, wannabe novelist.

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