Bitfinex, a major crypto exchange, recently updated its KYC rules. According to the new rules, verified users will need to provide proof of residence. This is part of the exchange’s attempt to improve its security and compliance with regulators.

New Requirements for Verified Users

This is part of a push by the exchange to improve its standing with regulators as well as to improve its own security. Besides providing proof of residence, the verified users will also need to provide proof of the origin of their funds. The Bitfinex exchange has its headquarters in Hong Kong and it is registered in the British Virgin Islands. Bitfinex added that it would store all information provided by users securely. According to the updated rules, users need to provide a statement from a service company, utility, or government authority that is no more than three months old. The statement will have to indicate your name as well as your residence.

What are Verified Accounts?

Verified accounts on the Bitfinex exchange enjoy some extra privileges. For instance, those who want to withdraw or deposit fiat currencies and some stable coins have to own a verified account. The verification process takes one to two weeks to complete. There are two levels of verification on the exchange and users can opt for a level of verification that serves their needs effectively.

Bitfinex Legal Challenges

Bitfinex is currently engaged in a legal tussle with the New York Attorney General. While the exchange has won a few victories in the case, the Attorney General is still pursuing the issue in the New York Supreme Court. The NY AG’s office accuses Bitfinex of essentially minting Tether coins worth about $900 million out of nothing.

No doubt, this case has gotten the exchange under the radar of other regulators globally. The issues raised in New York courts have no doubt raised concerns with other regulators globally. This update to its KYC rules might be an attempt to appease regulators the world over who might wish to pursue the exchange with similar charges.

The NEW FATFT Guidelines

It is also worth noting that many nations around the world are now implementing the new Financial Action Task Force recommendations. These guidelines by the FATF call on nations to implement tougher KYC and AML rules for those in the crypto sector. As a result, some fintechs and crypto exchanges have been forced to cease operations since they are unable to comply with the new rules. Some have claimed that they are unwilling to implement the new rules since they violate the privacy of users.

Increased Regulatory Compliance

In the early days of crypto, many people shied away from regulation. However, with the rising level of money laundering and fraud in the crypto sector, using a regulated exchange might be good for the crypto sector. It helps to ensure that users enjoy legal protections and that they are not caught up with bad actors trying to use crypto for illegal purposes.

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