Circle bitcoin fraud all Bitcoinist news in Telegram! So Why Did Goldman Sachs-Backed Circle Really Buy Poloniex?
A couple of experts share their thoughts on the implications for the soon-to-be first compliant US crypto exchange and its customers. As the dust settles on Circle’s acquisition of Poloniex, U. AML mandates, shared his comments with Bitcoinist. Most crypto exchanges that are processing fiat to crypto transactions are very compliant and, in some cases, even more so than banks. It all really depends on jurisdictions and the compliance policies given by countries to crypto exchanges. For crypto exchanges, the challenge lies in how little formal guidelines there are from regulators. As a result, most of the industry has been doing self-compliance in absence of clear procedures.
To err on the safe side, crypto exchanges over-regulate themselves. For example, most exchanges ask for passport verification in order to confirm users’ identities, whereas most banks only require government-issued IDs, such as drivers licenses. At the time, the company informed its Bitcoin customers that they can can cash out or transfer their balances to Coinbase, if they wished to continue to use the cryptocurrency. So why did Circle decide to jump back into the crypto game? In the past, Poloniex had a lot of issues with onboarding new users and properly building out its KYC process, mainly due to the large amounts of time it takes to verify users.
Given the level of KYC that exchanges force themselves to go through, scaling compliance is almost a separate product that the exchange has to build out. Through this acquisition, Circle will deploy more people to help handle compliance—more employees to build and process KYC due diligence faster. This is the same type of issue traditional banks have when it comes to scaling. Compliance costs keep multiplying, and yet, they aren’t always found to be effective. Meanwhile, another takeaway has been put forth by Nathaniel Popper, author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money. Just got this slide from a confidential Circle presentation. It does more to explain Circle’s acquisition of Poloniex than anything I have seen today.