Know Your Exchange Report - October 2019


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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  1. About Us
  2. Changes are visible – more compliance and more security
  3. Know Your Exchange
  4. Executive summary
  5. Examination methodology
  6. Risk Assessment results
  7. Appendix: Exchange specific findings
  8. Appendix: Glossary
  9. Appendix: Case studies
  10. Disclaimer

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:

  1. Help users to understand more about some of the key risks that can be identified and are associated with each cryptocurrency exchange, to support the user to make a more informed decision
  2. Guide supervisors who are charged with developing a framework of regulatory systems and controls to manage the activities of cryptocurrency exchanges and to benefit from having access to a comprehensive and consolidated set of financial crime compliance risk analysis

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:

  • Custodial Wallets (note, in some situations activity can be very similar in terms of oper-ating model to exchanges)
  • Payments Applications and Payments Gatekeepers
  • Security Token Offering Market Operators (STO)