The largest crypto exchange in the world, Binance, has made moves to champion an initiative to eradicate money laundering.
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Despite the obvious lack of privacy measures for years on the major public Blockchain networks such as Ethereum and bitcoin, which discourage the settlement of fraudulent transactions, a popular narrative against cryptocurrency is the suspected use of such digital assets by fraudsters.
Eradicating claims that are easily refutable
So many major cryptocurrencies such as Ethereum, bitcoin, Ripple, EOS, bitcoin cash, and more are not anonymous. They have different means to keep track of users. Using the Anti-Money Laundering and Know Your Customer systems can help crypto exchanges to prevent fraud. Criminals will have a hard time settling the transfer of such illegal proceeds.
Government agencies and other authorities around the globe are also aware of these non-anonymous features of blockchains. Perhaps this development is responsible for the legitimization and recognition of the cryptocurrencies in governments. Countries such as Japan, US, and South Korea have joined the train, and many more are in the process as well.
The collaboration of Binance and Chainalysis
This week, Binance launched a collaboration with a leading Blockchain analysis company known as Chainalysis. The company evaluates various suspicious addresses and transactions in a bid to enhance its Anti Money Laundering system. This will also go a long way to legitimize the crypto sector.
Co-founder and COO of Chainalysis, Jonathan Levin said,
“Cryptocurrency businesses of all sizes face the same core challenge: earning the trust of regulators, financial institutions and users. We expect many to follow Binance’s lead to build world-class AML compliance programs to satisfy regulators globally and build trust with major financial institutions,” said Jonathan Levin, co-founder and COO of Chainalysis.
Institutional Banks and money laundering
This year, the most influential banks had money laundering issues. The famous Danske Bank was indicted after it laundered $243 billion from some criminal groups. Nordea Bank also received several fraudulent payments in the region.
The growth of the cryptocurrency market has called for the tightening of the various AML systems used by exchanges. This is expected to solidify digital currencies as a recognized asset class. The market is also expected to be well regulated.
The goal of Binance
The CFO of Binance, Wei Zhao reported that the vision of the firm is to increase the free movement of money globally. It also plans to adhere to all regulations of countries it is present in. Zhao said,
“By working with Chainalysis, we are able to continue building a foundational compliance program that enables the next phase of our growth. Our vision is to provide the infrastructure for a blockchain ecosystem and increase the freedom of money globally while adhering to regulatory mandates in the countries we serve.”
Why compliance is important
The crypto market is reaching a new developmental phase. The bull market last year saw a surge to $800 billion. During this time, the asset class gained mainstream awareness in regions that established regulatory frameworks to prevent the growth of local Blockchain markets. It also gained ground in areas that support cryptocurrencies.
Governments are introducing guidelines that embrace crypto businesses, and this role of Binance will ease the process until it reaches a global scale.