Could Crypto Exchanges KYC Prevent Money Laundering In Bitcoin?
China’s regulators recently warned that cryptocurrency is a potential threat in anti-money laundering as bitcoin could easily bypass the country’s capital controls and achieve cross-border capital flows.
Using cryptos to launder money has become a real threat to the current financial regulatory system. While the thorny issue at the state level seems to be a reason why bitcoin exists and will last in some bitcoiners’ eye.
A bitcoiner named Jiang Ming told Legal Daily that money laundering is one of the pillars to prop up cryptos’ prices; as long as there’s money-laundering demand, bitcoin price is certain to rally. Moreover, the crypto circle itself is in the grey zone; the more chaotic it is, the better timing it might mean to earn money.
Anonymity and cross-border transaction in cryptocurrency have provided facility for money laundering and tax evasion. One could evade tax easily by purchasing cryptos with the supposed cash and sell it for target currency when he crosses the borderline if he needs to bring large amount of cash to the target country.
“Cryptocurrency, in essence, is a string of encrypted data. Its value only comes from recognition. As long as a token is not issued for the sake of soliciting money, it is almost the same with the stock, it’s also an investment.”
“Like gold and silver, it initially lacks regulations on money laundering. But with cryptos listed on some large exchanges, money laundering is not as easy as it used to be.”
Though most crypto exchanges have KYC and real name authentication system which usually consists of identity verification, face recognition and video identification, 8btc found that users could still pass it with a pseudonym name and a fake identity, and then token-to-token transaction could be conducted.
That means, users are able to bypass the KYC system and transfer cryptos between different exchanges and cash them out for legal tender in some small exchanges or via over-the-counter transaction.