Binance takes a step towards self-regulation following partnership with IdentityMind
Binance, the largest cryptocurrency exchange based on adjusted volume, is collaborating with IdentityMind’s Know Your Customer [KYC] and Anti-Money Laundering [AML] services. The partnership was announced via an official blog post on 26 March.
IdentityMind is a risk management and data compliance platform which will look at client and transaction fraud, thereby improving the AML and KYC standards of the exchange. It will offer real-time client onboarding, transaction monitoring, and case management solutions to the cryptocurrency exchange.
Samuel Lim, the Chief Compliance Officer of Binance stated that this partnership will allow the exchange to “re-invest in the blockchain ecosystem.” He further added,
“We continue to evolve and enhance security systems while adhering to regulatory mandates in the countries we operate in. The goal is to foster greater trust among financial institutions worldwide.”
This is yet another move towards ‘self-regulation,’ over government-forced regulation, something many exchanges seem to be taking these days. Changpeng Zhao, the CEO of Binance called this principle of appraisal the “Secret sauce of success.”
“Secret sauce of success. @binance is one of (being polite to others) the most self-regulated exchange in the world.”
Self-regulation is seen as another step towards ‘legitimizing’ the cryptocurrency industry. Many notable exchanges have employed this practice through partnerships, like Binance, or by forming associations with other crypto-intermediaries.
In February 2018, Coinbase, eToro, CryptoCompare, CEX.IO, BlockEx, CoinShares, and CommerceBlock joined together to form CryptoUK, a chamber of commerce-like association meant to self-regulate the cryptospace in the United Kingdom.
South Korea, home to notable exchanges like Bithumb and Upbit, saw the creation of a self-regulatory system under the Korean Blockchain Association in April 2018. The body is responsible for maintaining the cryptocurrency market’s regulatory framework within the country.
Following the Mt. Gox and Coincheck episodes, the Japanese Cryptocurrency Exchange Association (JCEA) was set up to maintain the industry’s compliance standards and advise exchanges on regulatory issues in April 2018
Interestingly, Binance is a proponent of self-regulation, because of their nature of shuffling their operations bases to avoid the domicile government’s regulatory hassle. A recent report indicated that the exchange was country hunting for a suitable regulatory environment, shifting their bases from China to Japan, Singapore, Bermuda, and Malta in the process.