What transpired Coinbase, the largest cryptocurrency exchange based in the United States, has agreed to pay a $50 million fine for allowing customers to open accounts without conducting adequate background checks. It will also spend $50 million to enhance its compliance program.
On Wednesday, the settlement was made public by Coinbase and the New York State Department of Financial Services. After a routine inspection revealed compliance issues, regulators began their investigation of Coinbase in 2020. Albeit the trade recruited a free expert, that didn’t fix the issues, so controllers started a conventional examination in 2021.
They discovered that Coinbase’s “know your customer” (KYC) process was the only time it performed basic identity verification. By the end of 2021, it also had a backlog of more than 100,000 alerts for potentially suspicious transactions. According to Adrienne A. Harris, New York State’s superintendent of financial services, “We found failures that warranted putting in place an independent monitor rather than wait for a settlement,” regulators ordered Coinbase to hire an outside monitor during the investigation.
This was because “So many investors flocked to cryptocurrency in 2020 and 2021.” Everything from major cryptocurrencies to smaller tokens saw rapid price increases as money poured into the industry. Investors usually buy crypto through apps and exchanges, and Coinbase is the most popular option in the United States.
Authorities have had to catch up with the rapid growth of cryptocurrencies and ensure that exchanges adhere to financial regulations. However, numerous cryptocurrency exchanges have broken the law. Some exchanges, like FTX, have gone out of business completely. Even though Coinbase’s situation isn’t all that bad, investors still have a lot of concerns about compliance issues like these.
Security is an essential consideration when selecting a cryptocurrency platform. Everyone wants to know that their cryptocurrency and money are safe. Numerous nations have outlawed and even closed down exchanges that do not adhere to regulations. You might be prevented from withdrawing funds from your account in those circumstances.
What will likely occur in 2023 is a renewed emphasis on financial regulation compliance by cryptocurrency exchanges. There were a lot of big problems last year, which hurt investor confidence and crypto prices.
This may necessitate a more stringent KYC procedure for crypto investors, particularly when opening a new account. There may also be lower thresholds for transactions that trigger fraud alerts. Although they may be somewhat inconvenient, they are an essential component of preventing the illicit use of cryptocurrency.
Despite Coinbase’s evident compliance issues, it is still a good place to buy and sell cryptocurrency. It is still a licensed exchange in the United States that has pledged to cooperate with authorities. Investors face a much greater risk when a large number of exchanges establish themselves in nations with more permissive regulations. While it’s difficult to feel 100 percent certain about most crypto stages at present, U.S.- authorized trades are a more secure spot to put away your cash.
