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

Exchanges are simply an important component of the system that makes the crypto market tick.

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.

How crypto exchanges approach KYC, AML and CFT complianceAs stated earlier, the process of regulatory compliance for AML and CFT involves KYC throughout transaction lifecycles.

Crypto exchanges will be divided into two groups namely the "Fiat-to-crypto" exchanges and "Crypto-to-crypto" exchanges.

Fiat-to-crypto exchanges typically perform at least some level of KYC because they deal with fiat money.

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.

KrakenKraken launched following two years of product development and beta testing, making it one of the oldest crypto exchanges.

"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.

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."

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.