KYC/AML & State of Cryptocurrency

Hi! We’re XCH4NGE, a new cryptocurrency platform launching October 18th. Our platform is designed to enable the seamless transfer of assets between fiat and cryptocurrency. We aim to take the hassle out of managing your digital assets by creating a one-stop shop for buying, selling, trading, and more. To achieve this goal we will be using the latest in multi-signature wallets, and are currently in the process of acquiring a banking license. With XCH4NGE, your digital currency will be exactly that- currency.

With that said, welcome to XCH4NGE Talks! This is the first in a series of articles talking about the current state of cryptocurrency, the future of the XCH4NGE platform, and how we intend to change the way people use and interact with cryptocurrency. Today’s topic is the ever controversial KYC/AML documentation, the current regulatory climate, and why we take a proactive view on regulation as a fiat on-ramp platform.

State of Affairs

If you’ve been involved in cryptocurrency for more than a few months, you probably already have an opinion on KYC/AML documentation. While 2017 saw a huge proliferation of exchanges and services more or less free of burdensome restrictions and regulations, in 2018 regulators worldwide have begun to catch up to this new market. Now, KYC is mandatory in countries like the U.S. and U.K., and many more countries are looking to follow them. Tellingly, the United States has just announced that it doesn’t consider itself bound by national borders in pursuing unregulated services, a statement which should cause fear among unregulated operators.

The roll-out of the (admittedly intrusive) KYC documentation has caused complaints from many users who previously were not required to submit such detailed information. These complaints are usually directed at the services and  centre on how regulation goes against the goals of cryptocurrency. While it’s natural to be frustrated with an added inconvenience, KYC is here to stay, and that’s not down to the exchanges. Furthermore, the advent of a stricter set of financial regulations on the market is, we believe, a positive step towards global acceptance of this promising new technology.

 

What is KYC/AML?

Know Your Customer (KYC) documentation is the process of obtaining identifying information about the clients of a service. To comply with this, clients are asked to submit up-to-date proof of eligibility to use the service. In the UK, this proof may include:

  • Personal Identification Documents (Passport, drivers licence, and some government issued ID’s)
  • Address Verification (Proof of Address in the form of a recent bill or other official communication)
  • Contact Verification (E-mail confirmation)
  • Financial Verification (Confirmation that you are currently or are eligible to be a customer of a UK banking institution)

It is essentially just to verify a customer is eligible to use a financial service in that particular jurisdiction. Some examples of ineligible clients include minors, undocumented workers, or individuals with particular criminal histories. It can also provide information under examination by law enforcement in case of future illegal actions.

AML (Anti-Money Laundering) requirements essentially refer to a raft of regulations enacted to prevent the conversion of illicitly obtained and undeclared money into legitimate assets (or money laundering, as everyone else knows it). Specifically, the regulations place the responsibility squarely on the government and financial institutions to create this regulatory framework to prevent criminal activity occurring in their domain.

 

Cryptocurrency Regulation

KYC and AML requirements represent significant efforts being made to regulate the cryptocurrency industry. Due to its disruptive and incredibly rapid rise to a several hundred billion dollar market, financial regulators understandably feel the need to closely monitor the space. The U.S., U.K., E.U., and South Korea have all made KYC/AML a required component of all crypto regulation, and dozens of other countries are making similar moves.

As mentioned earlier, traditionalists often say that KYC is antithetical to the goals of cryptocurrency (i.e. unregulated, anonymous, and borderless). While the introduction of such documentation may not be the ideal that many saw in cryptocurrency’s early years, it may quite possibly be the only way we will see adoption on a large scale. For the industry and exchanges to resist regulation would not only lose us international recognition and support but would also make the entire industry a legitimate target for governments and financial institutions.

Although many studies have shown that criminal usage of cryptocurrencies is a far lower percentage than many critics have claimed, it is still estimated that billions of dollars are laundered using cryptocurrency every year, not to mention the blatant market manipulation and insider trading that runs rampant in the industry. On the other hand, it is also true that the vast majority of cryptocurrency users are completely above board. This is our chance, as a community, to show the world that cryptocurrency is not only here to stay, but that this is a good thing.

 

XCH4NGE

At XCH4NGE, we face a high regulatory bar due to our status as a fiat on-ramp service. While intrusive, this policy will also provide our users several benefits. By partnering with Experian for our KYC, we ensure that every user on our platform is verified as genuine. Not only does this help stop dark money from entering our ecosystem, it also allows us to prevent the sort of fraud that proliferates on many existing peer-to-peer services. After being verified, all user data is encrypted and stored behind some of the best digital security available.

Despite this, we believe that regulatory compliance in crypto can be made to benefit everyone. Looking ahead, this will allow us to engage proactively with the banking industry and forge partnerships to bring our users all the advantages of cryptocurrency. When it comes to keeping your data safe, we adhere to the highest standards of data protection and network security to ensure that your private information stays private. As you are verified during sign-up, there is no need for trust in any other user, and your username is the only identifying factor other users can see.

The cryptocurrency market is by definition a trustless one, and we understand that there are no shortage of shady platforms and service providers. As crypto becomes more and more mainstream, however, there is a real need for reformation. The team at XCH4NGE understands that as a representative of the crypto industry, we must be the change we wish to see. As such, we are committed to providing our users the best service possible in a secure, friendly, and transparent manner. In turn, our product and service range are designed to provide users everything they need to begin using cryptocurrency and take control of their financial futures.

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XCH4NGE is currently taking user applications for our beta test program! Head to https://www.xch4nge.com, and complete the Early Access Registration to show your interest in the beta platform as well as updates, giveaways, and more.

 

The Growing World of Non-Fungible Tokens

The crypto space continues to see more non-fungible token concepts enter the market. These tokens are different than their fungible counterparts in that they’re not interchangeable. Think of non-fungible tokens as being unique in the world. They usually represent a digital or real-world asset and are not created equal. Therefore, unlike say, Bitcoin, not every token represents the same amount of value.

Fungible vs. Non-Fungible Assets

The US dollar is another example of a fungible asset. It doesn’t matter if you exchange a dollar in your pocket for any other dollar in existence. Except in rare cases of misprints, regardless of the origin of your dollar, it will still only be equal to one dollar in value.

The Importance of Non-Fungible Tokens

Non-fungible tokens serve an essential purpose within the crypto space. These tokens are created to represent a particular asset, which holds a particular value within a digital ecosystem. They can be held virtually, or they can represent real-world items such as real estate, documentation, or even personnel.

In the past, video game avatars, virtual real estate, and other digital gaming commodities have sold for millions. In one instance, a language teacher by the name of Ailin Graef sold a piece of virtual property from the game Second Life for one million dollars. While this sounds rare, it’s actually much more common than you think. One study places the video game virtual assets market at over 50 billion dollars per year. Who said playing video games is a waste of time?

Non-Fungible Tokens
$635,000 in Virtual Real Estate

IBM Researching Non-Fungible Tokens

Non-fungible tokens are unique and cannot be duplicated or forged. The ability to be authenticated without the need for third-party organizations gives non-fungible tokens a considerable advantage over the previous verification systems. By eliminating the need for third-party verification, non-fungible tokens are allowing for new and innovative ownership strategies to develop.

The computer giant IBM recently announced a platform which would utilize non-fungible tokens coupled with RFID technology to monitor car sales. In addition, the platform suggests utilizing the same technology applied towards auto registration.

By tokenizing a real-world asset, you gain the ability of frictionless transfer.

Imagine selling your car. Currently, this process consists of numerous steps including showing up to your local DMV with your ID, registration, and ownership documentation. The person purchasing your vehicle is also required to arrive at the same location with similar documentation.

The process can be extremely time-consuming. If your car was tokenized, you could just accept payment for the item and transfer over the token that represents ownership of the vehicle. It’s this frictionless economic activity which has captured the attention of many blockchain-based startups in the industry.

Tokenizing Real World Assets

As you could imagine, the ability to represent an item virtually can be applied to almost anything in the world. Non-fungible tokens are seeing expanded use in the tokenization of real-world assets. Your home could even be represented by a unique non-fungible digital token. You could easily transfer, sell, or verify property ownership without having to track down your original deed. Your virtual deed would be all you need.

The tokenization of real estate has already begun, with numerous blockchain startups claiming to accomplish this task with ease. Blocksquare is one such platform offering these services to the public. The platform utilizes PropTokens to represent a particular property.

Non-Fungible Tokens

While the concept for tokenizing real estate sounds impressive, there are still some legal hurdles that you must jump in order for these platforms to see large-scale adoption. For one, tokenized real estate platforms must find a way to adhere to the numerous, and often varying, local real estate market requirements.

Countries, states, and even counties have their own real estate laws. This differentiating structure means that for a tokenized real estate platform to succeed, it’s going to have to offer some form of localized governance. In this manner, tokenization can be applied with success.

Governments Look to Non-Fungible Tokens to Digitize Records

Governments are looking towards non-fungible tokens to help reduce the inefficiencies found in current land record systems. In January of this year, the Vermont city of South Burlington began utilizing a blockchain based land registry. The system uses non-fungible tokens to give each land title a unique digital signature. The program has been so successful that Vermont is looking to institute some additional blockchain-based programs.

ERC-721 Protocol

The most popular platform in use for the development of non-fungible tokens is Ethereum’s ERC-721protocol. This non-fungible token protocol became popular in December of last year thanks to the Ethereum-based game Cryptokitties. This game allows users to buy, trade, and sell unique digital assets in the form of virtual cats.

Non-Fungible Tokens

Cryptokitties utilizes the ERC-721 protocol to ensure each virtual asset is unique in nature. The game became hugely popular during November 2017, and at one point the vast number of users resulted in massive congestion on the Ethereum blockchain. Regardless of these delays, Cryptokitties helped show the world the possibilities and the earning potential of virtual assets. In one instance, a Cryptokitties user sold their virtual cat for over 100,000 USD.

Non-Fungible Tokens on the Rise

Non-fungible tokens are a critical component in the digitization of the economy. Gaining the ability to represent a unique asset virtually is an essential step towards the further integration of blockchain technology into our market. Non-fungible tokens continue to see growing adoption as their benefits are showcased in the marketplace.

This article was written by David Hamilton on Coincentral.com. To learn more about cryptocurrency industry news and receive the latest news about the XCH4NGE platform, make sure you sign up for our mailing list on the home page.

OmiseGO (OMG): The Payment Token

OmiseGO (OMG) is an e-Wallet, smart contract platform, and the ERC20 token issued by Omise, a venture-backed payment services company similar to Stripe. Their ultimate goal is be a “preeminent high-value exchange and settlement platform.” After establishing their payment network, founders Jun Hasegawa and Donnie Harinsut created OmiseGO. The OMG blockchain operates on proof-of-stake, and the native currency is the ERC20 OMG token. There are exactly 140,245,398 OMG tokens in existence, and all but 38 million are currently circulating. The founders capped the OMG token supply and will not create any more.

Although new services like Paypal and Venmo create pressure for a more competitive network, the same centralized counterparty risks apply. Also, most legacy networks are typically unwilling to allow interchangeability across providers, instead protecting their network with a “winner take all” mindset.

OMG wants to build a fully decentralized peer-to-peer system to enable “asset agnostic” value exchange in real time on an Ethereum-based blockchain. (This means any decentralized or fiat currency pairs or ERC-20 tokens)

Omise vs OmiseGo

It is important to understand the difference between Omise (the parent company) and OmiseGO. Omise is a payment enabler that integrates with online and offline retail platforms, comparable to a Stripe or Paypal for the Japanese and SE Asian markets. Major ecommerce platforms including WooCommerce and OpenCart have also integrated with Omise.

Not only is Omise’s API publically available, but it’s also PCI DSS (Payment Card Industry Data Security Standard) compliant. In combination with its ability to support SWIFT, these are important tools for enabling cryptocurrencies to stay compliant with financial regulations. OmiseGO will eventually attempt to succeed SWIFT as a way to change currencies between all platforms, both traditional and crypto-related.

Omise has a mobile wallet in use similar to Apple Pay, as well as a Facebook chatbot that enables payments. Sending payments in increasingly informal manners (sms, messenger) will continue to gain traction, particularly in underserved areas. With a bevy of large clients including McDonalds, Allianz, Bose, and more, Omise has considerable support in its endeavours.

Because of its integration with the Omise platform, OmiseGO has received mcuh support from the media. It is this integration that will eventually allow users to exchange currencies freely between all cryptos, fiat currencies, and even 3rd-party tokens on their DEX (decentralised exchange). OmiseGO appears to have an advantage in providing liquidity over other coins and tokens due to VC backing.

OMG IRL

OMG and Omise are different from most cryptocurrencies dedicated to disrupting global banking. Given its parent company’s strong position in the online payment ecosystem, OMG is following the banking industry trend of providing flexible banking to the unserved and underserved. To increase speed, OmiseGO will eventually adopt Plasma for Ethereum.

The World Bank’s Global Financial Inclusion database estimates that more than 2 billion people around the world are currently unbanked. This means that they not only lack a bank account, but they also have no access to a financial institution. 9 million are unbanked with a further 24.5 million underbanked even in the United States. Although Omise is relatively unknown in the US, it is expanding from Thailand to tap into Japan, China, and other SE Asian markets. Together, these points all mean that OmiseGo has a strong placement in the cryptocurrency arena.

Summary

OmiseGO is an ERC20 token that is wants to provide financial services to SE Asia’s unbanked population. The OMG blockchain will supplement the existing Omise payment and mobile wallet infrastructure. Eventually it will utilise Ethereum’s Plasma Network for rapid transactions and PoS verification. Thailand’s Central Bank and Ministry of Finance, as well as prominent Asian VC’s, all back OmiseGO. The Ethereum founders are also consulting on the project, so clearly OmiseGO is a project to keep on your radar!

OmiseGO Website

Is Mass Adoption No Longer the Goal?

To celebrate our launch, XCH4NGE is giving 2,000 users 0% transaction fees for a whole month! In this article, we explain what XCH4NGE stands for, why we believe in mass adoption, and how we aim to provide one of the best user experiences in the industry.

Ethereum co-founder Vitalik Buterin made headlines this week as he chastised the cryptocurrency community for a lack of focus on the core goals of cryptocurrency. Decrying the ETF obsession that is currently gripping investors, he believes that more effort and attention should be given to mass adoption.

Mass Adoption

The comment comes as new money is piling into the markets, driven primarily by promises of large price increases. The original beliefs of cryptocurrency were instilled by the cypher-punk movement which counts luminaries such as Nick Szabo, Bram Cohen, and even the illustrious Satoshi Nakamoto among its numbers. Their core beliefs were that privacy-enhancing technology and cryptography should be used as a route to social and political change. This sentiment can still be felt on social media communities, where charged accusations of centralisation, shilling, and bad tech get thrown around daily. True cryptocurrencies are revered for their ability to eliminate the need for trusted third parties, their relative anonymity, and their ability to reduce dependence on government-issued, unbacked fiat.

These are worthy goals, but it appears that Vitalik is correct in identifying a shift in community focus. As new money piles in looking for financial gains at any cost, the goal of mass adoption appears to have fallen by the wayside in favour of crypto as speculative investments. The transition from pushing for real world use cases to a purely speculative instrument would shut out a significant chunk of potential users, especially those who could benefit the most.

Mass Adoption is for the People

As cryptocurrency enthusiasts ourselves, we know that the crypto market can be an overwhelming place for new users. XCH4NGE believes that cryptocurrency should be for everyone, and that consequently it should be easy to purchase, sell, and trade. In order to achieve these goals, we have designed our platform to be not only incredibly easy to use, but also quick and affordable.

Ease of Use

A recent study has found that the greatest obstacle for obtaining cryptocurrency is how complicated the purchasing process is. A full 44% of people surveyed say the process is too complicated. Additionally, 60% of those who don’t own cryptocurrency wish that they did.

To alleviate this problem, we’ve designed our platform to be sleek and intuitive, allowing you to be confident in your transactions whether you’re a seasoned trader or a crypto-newbie.

Live Support

It’s a fact that even the best websites can run into problems. If you have a problem while using exchange, we won’t leave you to suffer with a chat robot. XCH4NGE will be providing 24/7 live support to help you with any problem you might have, whenever you need it. From setting up an account to selling large amounts of crypto, we have you covered.

Speed

With exchanges that rely on SEPA, transactions can take anywhere from three hours to three weeks to complete. In a digital world that requires constant control over your assets, this is simply unacceptable. XCH4NGE solves this with our true peer-to-peer system, allowing you to purchase cryptocurrency in as little as five minutes, and at a maximum of two hours.

Low Fees

An important aspect of mass adoption is the ability to purchase small amounts of cryptocurrency for day-to-day use. Unfortunately, high transaction fees often mean that £50 spent on cryptocurrency actually translates into £47 in Bitcoin. Slippage on this level is intolerable to investors, and even more so to the average family. XCH4NGE will be operating a highly competitive fee structure in order to offer our users the best value we can.

Secure

In the world of cryptocurrency, investors must tread carefully. Hackers are constantly coming up with new ways to steal crypto, personal information, and more! As such, an investor must make sure that the services they use are as secure as possible.

With many peer-to-peer services like Local Bitcoin, accounts needn’t be verified. While this anonymity may appeal, it actually opens up both seller and buyer to potential fraud. Malicious actors can fool sellers with stolen documents, and have their sale proceeds frozen (or even confiscated). Scammers can also defraud buyers, particularly through the unlawful use or sale of their personal information. Meet ups in person can also be incredibly risky, not least due to the risk of robbery.

Enter XCH4NGE. All of our users are KYC/AML verified by Experian, eliminating the potential for fraud or abuse and allowing you to buy and sell without fear. We also offer all of our customers multi-signature wallets and 2FA verification for all transactions to keep your assets safe.

Incentives

Still not convinced? Maybe this will change your mind. XCH4NGE is offering the first 2,000 users to pass their KYC/AML verification 0% transaction fees for a whole month! That means more Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and XRP for your money.

You’ll be able to create an account with XCH4NGE in August, followed shortly by KYC Verification. In the meantime, make sure you head to the XCH4NGE main website and register for Early Access! This offer won’t wait around, and neither should you.

Hong Kong’s Banking Sector to Get a Blockchain Platform by September

The Hong Kong Monetary Authority, the region’s currency board and central bank, is set to launch a live blockchain-based trading platform in September. The banking project is backed by HSBC, Bank of China, ANZ, DBS Bank, Bank of East Asia, and the Hang Seng Bank.

According to Reuters, Howard Lee, HKMA’s deputy chief executive, has hailed it as the largest multi-bank blockchain project of its kind in Hong Kong, and the result of the institution’s 2017 resolve to develop a proof-of-concept (POC) financial system.

He also revealed plans to link up other trading platforms to the network to provide greater coverage and facilitate cross-border trades.

The technology is being developed by Ping An OneConnect with Deloitte as the official project consultant. The platform is built using a permission-based Hyperledger Fabric 1.1. system.

Acceptance tests are ongoing with the first product set to support open account financing, enable banking institutions and companies to submit financial orders and invoices, and provide financing.

In 2017, when testing began, the main objective was to develop an application that would be based on distributed ledger technology.

It would reduce risks associated with fraudulent trades and provide greater transparency within the banking industry, as well as detect duplicate financing.

According to HSBC’s head of growth and innovation, Vivek Ramachandran, the latest announcement is a testament to how blockchain technology can help counter banking inefficiencies.

Last year, Singapore and Hong Kong made a blockchain oriented deal to open up trade between the two regions, and the new platform is set to realize this objective.

The Hong Kong, Singapore Blockchain Deal

In October last year, Hong Kong and Singapore’s central banks, HKMA and the Monetary Authority of Singapore (MAS), respectively, outlined plans to link up trading networks via a blockchain platform to overcome errors and fraud, as well as strengthen trade.

According to Norman Chan, head of HKMA, the new technology would replace the inefficient paper-based system.

Letters of credit, for example, have been a major hurdle facing trade between the two Asian nations.

Their purpose is to reduce the risk of fraud between exporters and importers but involves a lot of bureaucracy and paperwork, leading to a significant loss of time.

The letters are, however, responsible for guaranteeing an immense $2 trillion worth of trade transactions. As such, a change in the platform would have far-reaching effects.

Market players expect that the new blockchain platform will validate a greater number of transactions between traders more effectively.


This story was written by Elizabeth Gail, and was originally published on coincentral.com. For more news, cryptocurrency resources, and information about XCH4NGE, please visit our Hub.