The Binance cryptocurrency exchange has outlined its intentions to eradicate money laundering activities from its platform. Since the inception of digital currencies, there has been a widely held perception that they are the tool that facilitates illegal transactions.
Most of the cryptocurrencies, including Bitcoin, Ethereum and Ripple, are not anonymous. Moreover, digital platforms have incorporated Know your Customer (KYC) and anti-Money Laundering processes, making it hard for criminals to use virtual currencies as a means of payment for illicit activities.
As governments and their corresponding oversight authorities become aware of the non-anonymity of blockchain transactions, they have relaxed their stance on cryptocurrencies. In fact, countries such as the US, Japan and South Korea have legitimized the crypto market.
Earlier this week, Binance teamed up with Chainalysis to improve their AML systems and further legitimize the cryptocurrency industry. Chainalysis is a blockchain security company that deals with suspicious transactions and addresses. Jonathan Levin, a co-founder and COO of Chainalysis, noted that all institutions in the crypto space find it hard to establish trust with regulators, users and financiers. He added that Binance will set a precedent which other players will hopefully follow to gain trust from financial institutions.
This year, several notable banking institutions have come under the spotlight for aiding in money laundering. For instance, Danske Bank laundered a whopping $243 billion for criminals, while the Nordea Bank is accused of accepting illegally acquired funds from smaller banks in the Baltic area.
The rising popularity of cryptocurrencies among institutional investors calls for the strengthening of AML systems in crypt exchanges. This would boost the reputation of digital currencies as an asset class and the crypto market as a regulated industry. In this regard, Wei Zhao, the CFO of Binance, said that the company will adhere to the regulations of the various jurisdictions in which it operates to ensure that it realizes its vision of increasing global financial freedom. Wei Zhao added at the partnership with Chainalysis would significantly contribute towards this end.
The famous cryptocurrency bull market of 2017 created mainstream awareness about this emerging asset class. Notably, the popularity increased both in areas where cryptos are favored and where they are unwelcome. Currently, many governments are working on enacting laws that provide a conducive operating environment for digital currencies. Initiatives such as the one adopted by Binance are expected to fast-track this adoption process.