Connect with us

Regulation

BitMex and ShapeShift Taking Different Approaches Towards KYC

mm

Published

 on

bitmex shapeshift

Throughout most nations in the world, companies dealing with financial products are responsible for gathering identifying information on their clientele.  The purpose of this practice is typically to discourage and track illegal activity, such as money laundering – protecting investors and service providers alike.

This identifying information usually extends to include documentation such as the following, and more.

  • Passports
  • Drivers licence
  • Employment status

Companies which have historically taken a lax approach to these requirements have been hit hard in recent years as a growing spotlight has been shone on digital assets.

Differing Approaches

Recognizing the important of KYC – sometimes through pressure exerted by regulators- companies which deal with digital assets are rapidly developing their own approach to the process.  The following are two examples of this activity, albeit with polar opposite plans of attack.

BitMex

Following a year in which regulators came down hard on BitMex, both within and outside of the United States, the digital asset exchange has now announced the completion of its ‘user verification programme’.

This completion means that 100% of the platforms user base has now completed the required KYC/AML procedures.  In doing so, BitMex has now directly addressed the main issue brought forth in a recent lawsuit levied against the company by the Commodity Futures Trading Commission (CFTC).

Shortly after the aforementioned lawsuit by the CFTC was brought to light, BitMex holding company, 100x Group, hired Malcolm Wright as its new Chief Compliance Officer.  As his title would suggest, this move was taken specifically to address compliance shortcomings at the company.  With the recent announcement of its compliance programme completion, it would appear as though BitMex is now on the right track.

Malcolm Wright, CCO of 100x Group, states,

“We are now one of the few crypto derivatives exchanges outside the US to be implementing know-your-customer requirements before a user can complete their initial deposit and first trade.  This significant achievement is the result of years of work to develop a robust compliance function to meet international standards.  BitMex has long been known for having world class security, technology, and product innovation.  With all users on the BitMex platform verified, we are demonstrating our commitment to being a compliance standout as well.”

ShapeShift

While BitMex opted for full compliance with current regulations, despite how arduous the process may have been, ShapeShift has opted for a different approach to the same goal.

When a company dealing with digital assets has any interaction with a token/coin it becomes subject to regulations such as KYC.  Through the use of increasingly popular decentralized protocols, the need for a company’s interaction is negated.

Eric Voorhees, CEO of ShapeShift, states, “By integrating our users directly to DEX trading, it means we are no longer part of the trade; we are not a custodian, a counterparty, or an intermediary of any kind at any step of the process…Thus, we are purely a software technology company, and in this capacity we are not regulated because we are not engaged in a regulated activity.”

By taking this approach, ShapeShift is clearly looking towards a future in which centralized exchanges will be phased out in favour of their decentralized counterparts.  While this transition may still be years away, ShapeShift will have a leg up on the competition when it does occur.

Spread the love

Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Advertiser Disclosure: Securities.io is committed to rigorous editorial standards to provide our readers with accurate reviews and ratings. We may receive compensation when you click on links to products we reviewed.

ESMA: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Investment advice disclaimer: The information contained on this website is provided for educational purposes, and does not constitute investment advice.

Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies.

This risk is higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

Securities.io is not a registered broker, analyst, or investment advisor.