Most Crypto Exchanges Still Don't Have Clear KYC Policies: Report

As revealed exclusively to CoinDesk, a global study of 216 exchanges by the reg-tech startup Coinfirm found 69 percent of these businesses do not have "Complete and transparent" know-your-customer procedures.

In the report, Coinfirm identified Binance as having a "High" regulatory risk based on "Exposure to anonymous activity," since deposits and withdrawals for values below 2 bitcoin reportedly did not require KYC as of February 2019.

Overall, there were several exchanges - including Coinsquare, Coinbase, Gemini and the Circle-owned Poloniex - that Coinfirm's Kuskowski identified as "Low risk" due to official licenses and strict KYC/AML policies.

Of the widely reported bitcoin trading volume was actually an artifice, often involving automated bots or misreported statistics from unregulated exchanges.

Throughout the research process, Coinfirm's team also found that some exchanges failed to fully implement the official policies on their websites.

A New York-based CoinDesk employee was able to do small crypto-to-crypto transactions without KYC or VPN using Binance, while purchasing bitcoin with a credit card did appear to require KYC. This harkens back to 2018, when Attorney General Barbara Underwood said Binance, Kraken, and Gate.io claimed they do not service customers in New York and as such her colleagues were unable to determine whether these platforms allowed "Manipulative or abusive trading," not to mention the trading of unregistered securities.

Regardless of how the KYC policy is actually enforced, it's clear that Binance is taking steps to beef up its compliance procedures.

Binance's Chief Compliance Officer, Samuel Lim, denied this assertion that users can deposit and withdraw thousands of dollars worth of crypto without any KYC, although he failed to specify what Binance's KYC requirements are.

"Where the industry currently stands, it is an ambitious, yet ongoing effort, to implement a unique KYC requirement to service all of our users and businesses. However, in every single jurisdiction that it operates in, Binance adheres to all local rules and regulations and has built trust among the public through its developments, services and values since its inception. For all of our regulated/licensed businesses, the standard followed is the model which is approved by the regulating body, including Jersey, Uganda, Malta and Singapore."

"We've seen a trend of more exchanges implementing these procedures in order to partner with these entities."