Understanding The Significance Of KYC And AML Compliance During Cryptocurrency Exchange Development
The reason why KYC (Know Your Customer) and AML (Anti Money Laundering) have been in existence for several years is to make sure that companies are transparent about the users they are dealing with and the source of their funds. Since cryptocurrencies have caused a huge disruption in the world’s financial system and are poised for further growth in the future, businesses are looking to scale up quickly by getting scalable and secure Cryptocurrency exchange development services.
While the pressure has caused governments to regulate the crypto market by formulating relevant KYC and AML regulations.
KYC is a process where information is obtained of customers who use a service by checking their ID proof, photos, bank accounts, credit card information and other utility bills. KYC aims to prevent non-registered people and unauthorized members from using a service. It can include minors, criminals and illegal immigrants. A detailed database is prepared for investigating any abuse of the platform. Several online platforms such as gambling sites and forex trading sites have used KYC to protect themselves from frauds.
AML is a set of regulations to prohibit income generation through illegal activities. There is a strong framework created by governments and financial institutions to ensure that people find it difficult to convert illegal money earned into legitimate assets. Money laundering is prevented by introducing several checks and balances in the system.
The need for regulation is high since billions of dollars of funds are handled by the cryptocurrency market daily across various geographical locations. While blockchain technology promotes decentralization and a trustless mechanism, regulation through rules and guidelines can witness stiff opposition. Criminals can take advantage of the system that promotes anonymity in executing trades and settling transactions.
The business of Cryptocurrency exchange development is a big money minter in the market. It facilitates buying, selling and exchanging of different crypto trading pairs. Profits can be made through fluctuation in the exchange rates. Registration of a user is mandatory for commencing operations on Cryptocurrency exchange. A crypto enthusiast is spoilt for choice as there are so many Cryptocurrency exchanges with a variety of features out in the world today.
Anonymous trading accounts are being greatly verified in recent times due to strict KYC and AML regulations imposed by the government. Those who do not follow these guidelines are either banned or their bank accounts would be frozen due to their failure to report illegal activities.
A few nations such as the US, UK and South Korea along with authorities such as the EU have prepared a detailed cryptocurrency regulatory framework. Hence, by fulfilling all the relevant guidelines out in pace by regulatory authorities, the time is right for Cryptocurrency exchange development now. Make maximum use of this profitable opportunity by connecting with the experienced developer team at Infinite Block Tech.