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crypto exchanges

Which is safer Are non-KYC crypto exchanges or KYC-compliant peers?

While most crypto exchanges have begun implementing KYC mandates, investors still have the choice to opt for crypto exchanges that promote greater anonymity by not imposing KYC. Regulators stay put on promoting KYC and anti-money laundering (AML) implementations as a means to ensure investors’ safety and protection against financial fraud. 

While most crypto exchanges follow regulatory recommendations to stay ahead , they do not make the kyc process a requirement for their investors . This is why investors are likely to choose crypto exchanges that promote anonymity.  But does opting for the latter as an investor mean compromising on safety?

The main thing is trust

Crypto Exchanges

Anonymity is two-way in most cases, exchange holders wishing to conduct non-kyc transactions often choose to remain anonymous to avoid legal scrutiny. On the other hand, decentralized exchanges like dYdX are trusted protocols created by the community. This instills confidence in investors despite the lack of kyc on the platform.

Therefore, monitoring the platform’s track record and the people running it becomes paramount when trading on non-KYC platforms.

Blockchain never forget

Although traditional finance argues that cryptocurrencies are also used in money laundering, this is an empty pretense. The rate of money laundering is decreasing day by day, according to the latest research, the rate of money laundered in crypto has decreased to 0.15%.

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Moreover, immutable blockchain records allow authorities to retrace owners of the transactions, further deterring bad actors from using crypto — both KYC and non-KYC platforms — to fund their practices. The permanent nature of blockchain has allowed authorities across the world to hunt down scammers, fraudsters and launderers of crimes they committed years ago.

Crypto Exchanges

Not your keys, not your coins

One of the biggest concerns is that crypto exchanges manage your coins as they want. Cryptocurrencies stored over crypto exchanges mean handing over the private keys to the exchange.

Using unvetted crypto exchanges that market no KYC requirements exposes investors to the risks of permanently losing their funds. While both types of exchanges — compliant and non-compliant to KYC — require investors to hand over their crypto assets to third parties, KYC-compliant exchanges instill greater trust among investors and regulators.

About Hama Amefiz

Amefiz is a professional blockchain, cryptocurrency and tech journalist, regular contributor to newsbsc.com who is writing analysis about the latest developments in the cryptocurrency and blockchain space.

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