In recent times, cryptocurrency exchange platforms have termed themselves as lucrative businesses to earn more profits. The crypto exchange has helped the traders make more money and have developed a lot of crypto millionaires by letting them set up their own crypto exchange business.
The cryptocurrency platform lies in the blockchain as it ensures to manage the data efficiently. The blockchain’s copy is stored in all the computers, and all the copies must be identical. If any small difference arises, then the change won’t be accepted till the nodes get to the consensus.
This decentralization network ensures top-rated security with high transparency and anonymity. Crypto exchange software assures anonymity as well. Users can transfer cryptocurrency by utilizing their public key without revealing their personal identity.
Crypto transactions are instantaneous. It does not involve any third party, and that is why the users can attain enhanced trust while undergoing transactions. Cryptocurrencies are transforming the world of finance that has not seen a lot of changes.
On the other side, though these advancements may seem like benefits, it has a lot of uncertain attributes to the financial ecosystem. As the crypto platform is anonymous, it contains several loopholes along with the existing benefits.
It has to be a concern but indeed not to worry about it! Even Amazon had bugs in its budding period. Cryptocurrency is not just budding concerning processes alone but even the whole technology. Hence, it will consume a little more time before the crypto platform becomes organized and entirely legal.
The cryptocurrency exchange platform is one of the hotspots of the crypto business. As discussed previously, cryptocurrency exchange platforms have opened up the uninitiated technology as a legally recognized business. This opens up a lot of opportunities for crypto enthusiasts to counter the possibilities of malicious activities.
What exactly are they?
To attain a better understanding of the above requirements, it is essential to have a look at a few issues that have already occurred in the Cryptocurrency Exchange Development. One of the most popular among them is the Mr.Gox issue, which resulted in a 7% bitcoins loss in circulation. Recently, the Binance trading platform lost nearly 7000 bitcoins as it faced a theft issue on May 7, 2020. Those coins were worth around $40 million on that day.
Considering all the circumstances, any crypto exchange must identify the requirements of the customers in order to make sure that their users don’t escape the taxation radars and, most importantly, to ensure that they don’t use the profit for any terrorist activities. Let us discuss the legal aspects in detail.
Know Your Customer (KYC):
KYC helps to establish the identity of the users in order to authenticate their actual identity against the ones who claim to be. KYC also involves collecting the identity and confirming them by utilizing their identity cards that are issued by the government. This might appear quite contradictory to the cryptocurrency principles. But most of the Cryptocurrency exchange software development platforms follow this process in order to attain the utmost security.
Anti-Money Laundering (AML):
AML refers to the procedures which are created to stop income that is generated by illegal activities. Some of the few activities include counterfeit goods, evading taxes, public fund misappropriation, manipulation of the market, and trading of illicit goods.
It is mandatory for any financial system to conduct due diligence practices to prevent risk factors. As the crypto practices are utilized in the financial organizations, with the help of stringent laws, these illegal activities can be reduced.
Combating Terrorism Financing
CFT is nothing but a set of procedures which tends to block all the financing sources meant for ideologically, spiritually, and politically oriented threats and violence that are directed at civilians. It is quite a complex process that explores various sources and channels through which funds are siphoned for these issues.
Anonymity is facilitated by cryptocurrency and blockchain in order to reduce the financing of terrorist activities. Hence, the process of combating the financing of terrorism is highly enforced by crypto exchanges in order to identify such practices.
In today’s world, the most common practices used by the Cryptocurrency exchange development company to experience the best crypto exchange development solutions are utilizing the white label crypto exchange platform. The worst thing you encounter is legal issues after investing a lot of time and money in building your business.
Additionally, to keep you more legally safe, KYC, AML, and CFT practices would help you to reach better heights within a short period. Though it may seem like a cumbersome practice initially, the users will have the trust in the invested cryptos that they are in a secure place. If you are a crypto enthusiast, you can invest in Cryptocurrency exchange development services to attain higher profits. Reach out to our reputed developer team to avail of a profitable solution soon.