Virtual currency exchange has opposed mandatory provision of information regards with KYC.

There is a likelihood of creation of new environment where can tainted by irrationality and fraud; therefore, monitoring system is recommended.

The blockchain analysis company, Chainalysis released a document that include contents that opposes the FATF's mandatory provision of information regards with KYC.

In February, when the Financial Action Task Force (FATF) proposed an obligation to submit customer's information to the virtual currency exchange, Chainalysis, a blockchain analysis company, there is a likelihood of creation of new environment where can tainted by irrationality and fraud; therefore, monitoring system is recommended.

The reasons for the criticism are described below. As a result of the improved anti-money laundering prevention system that against terrorist funds, higher risk institution gets greater risk.

Such a structure would be transformed into an underground banking system and the exchanges that do not have KYCs cut off existing regulated financial services (bank or insurance) due to complex problems.

The underground banking system we talk about here refers to a platform different from the current mainstream, such as the P2P-type distributed exchange. The company claims that excessive regulations will make it more difficult for the authorities to track down the exchange, so that it makes situation worse.

As an alternative, Chainalysis suggests using a monitoring system to conduct fraud or customer care. It also argues that in order to use virtual currency services, the FATF should impose an obligation for all individuals to register and obtain permission, and that obligations should be made under existing business boundary regulations.

Because some companies that do not comply with the law by imposing more complex demands and friction on regulated virtual currency service providers (VASPs) are likely to run on uncentralized P2P exchanges, it is possible to putting global financial institutions at new risk.

Therefore, we should be aware of that "over-necessary regulations could turn to poison."

 

Reporter Jenny Lee (news@dailycoinews.com)의 기사 더 보기

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