The Know Your Client policy established by the Financial Industry Regulatory Authority and other financial agencies is generally meant to do two things. First, its rules should compel exchanges to know the essential facts about each customer. This can include information about the identity and financial situation. Second, it should comply with anti-money-laundering legislation and regulations. Many cryptocurrency traders do not want to provide such information to people over the internet. Luckily, there are still exchanges that cater to such customers.
Godex is a fully anonymous crypto exchange without ID requirements. Customers only have to enter their keys to exchange cryptocurrencies. The service supports dozens of cryptocurrencies and provides customers with information like trading volume, conversion tables, and more. Additionally, exchange rates do not change while the customer waits for the platform to complete the transaction. The downside to this exchange is that you cannot buy cryptocurrency with fiat on it.
Binance is a Malta-based exchange with over 6 million clients and a $4 billion 24 hour trading volume. Plus, they accept fiat. They have a centralized exchange, but it is vulnerable to hackers seeking to steal users’ personal information. However, they have solved this issue by creating Binance DEX – a decentralized exchange. The best feature of this new platform is that new users can create a demo account where they receive a test wallet and test funds to see whether they like the exchange.
Changelly protects its clients by not requiring them to create an account. All they ask for is a legitimate wallet address. There are some other perks to using Changelly, too. First, they charge a flat fee of 0.5 percent so that customers always know what they will need to pay. They also establish favorable exchange rates by monitoring the rates of other exchanges. Changelly does not provide a wallet. Customers will have to get their own wallets. They also do not accept fiat currencies.
Kraken is another self-regulated, anonymous exchange. This platform is a safe bet for people wanting to keep their identities safe from online thieves. However, customers who plan on withdrawing more than $5,000 have to provide proof of identification. Fees are also very low, and they decline if trading volume increases. Kraken does not offer a wallet service, but customers can keep enough money on the exchange to use for trading.
The unique thing about Bitshares is that it is a decentralized exchange that issues market-pegged smart coins. These crypto-based assets have over 200 percent of their value backed by the platform’s core currency. Users can convert any time they like. This feature significantly reduces risks for traders. Bitshare also has high transaction speeds. The average transaction speed is 1.5 seconds.
The Downsides of KYC
Know Your Client regulations were made to prevent fraud and money-laundering. Ironically, they help perpetuate the fraud by forcing exchanges to hold users’ social security numbers, drivers’ licenses, etc. Any thief with a grain of sense and a computer can hack into one of these companies and steal your life. In essence, government bureaucrats are punishing legitimate investors and entrepreneurs by making them adhere to more and more complex financial regulations. The government is inconveniencing regular people because of the actions of some evil few.
There is more to KYC than preventing money-laundering and fraud, though. According to FINRA rules 2090 and 2111, dealer-brokers are mandated by bureaucratic fiat to know all the facts about each client and must have “reasonable grounds” when making recommendations. Well, what the hell does that mean? It means that a broker and client spending ten years and ten million dollars suing each other in America’s sorry excuse for a justice system.
In normal, free societies, individuals get to determine the conditions of their association. Whether it is an exchange and a client, or a repairman and a guy with a leaky roof, the rules should not be established by the vice deputy undersecretary to the vice secretary of the vice president of the Department of Paperwork. In unfree societies governed by capricious bureaucrats, you get KYC.
On the contrary, decentralized and anonymous exchanges are a bastion of freedom in an evermore less free world. Investors can beat this absurd system by using one of these exchanges.