Edition: October 2019
Format: PDF, 55 pages
Coinfirm’s Know Your Exchange (KYE) Report consists the findings of a review of 238 cryptocurrency exchanges using a range of risk factors associated with financial crime, consumer protection and regulatory compliance.
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Recent innovative technologies, such as blockchain, offer an exciting new foundation to devel- op SupTech and RegTech solutions that can achieve significant improvements in productivity, efficiency and effectiveness in global compliance and payments solutions and services.The cryptocurrency exchanges are at the heart of the crypto ecosystem and as such fulfill the role of its guardians. They are primarily responsible for protecting their clients and pro- moting the good reputation of cryptocurrency markets. Negative news relating to exchanges adversely impact the entire market and even the valuation of cryptocurrencies itself. Exchanges are gatekeepers to the crypto markets — if this responsibility is exercised effec- tively and diligently, then they ensure control, stability, security and frictionless business operations. Know Your Exchange report addressing the due diligence on crypto exchanges touches upon one of the most important challenges for market participants and financial institutions evaluating exposure to this sector.
The objective of this analysis is to provide reliable, unbiased data that can be used to guide and inform readers on compliance best practices and to identify potential risks that may indicate a greater risk of financial or reputational loss or disadvantage.
The analysis that has been performed is based upon a range of risk factors that are recognised in international laws, regulations and guidance, including factors such as: the application of customer due diligence procedures to identify and verify users of the exchange services; regulatory licensing and authorisation; jurisdiction risk; customer risk; and adverse media news that may indicate any association with crime and terrorism. The details that are provided should not be deemed as providing advice or in any way ap- pear to recommend that the reader should use or not use a service, but we do hope and anticipate that the results can be used as part of a wider and comprehensive process of risk assessment of each exchange.
The purpose of this report is primarily therefore to:
This report is the 2nd release in a series of updates that will be provided and published periodically to clients of Coinfirm products and services, and also on demand when requested by interested parties. Our sincere hope and expectation is that by providing this information and analysis on some of the inherent risks relating to cryptocurrency and blockchain use, we can make a sustainable and measurable contribution to the development and promotion of global standards in AML/KYC for blockchain applications.
The Report does not cover the risk associated with: