Regulation is a big and challenging topic in crypto these days. Looking at the latest court decisions and transcripts in the US, one could conclude that regulators and courts have held varying opinions about what crypto assets are and how they should be regulated at different times. Thus, we can expect that regulations may continue to evolve.
This blog post is not a legal perspective or legal analysis, but simply our common-sense view on how we should comply with regulations, specifically KYC and AML.
Here are some key points:
- KYC and AML. On this platform, we don’t require customers to go through KYC procedures. However, that doesn’t mean we’re OK with potentially illegal activities – we’re not. We ensure that our customers are indeed KYCed and checked by offering payment methods used in CeFi. We avoid payment methods specifically designed to evade regulations. For example, we do not accept payments with gift cards or cash. By using CeFi payment methods exclusively, we trust that the regulators of these methods will suggest regulations, impose limitations, and offer ways to prevent AML according to legislation, potential risks, etc. Thus, we don’t need to repeat the same process if regulators have already offered their viewpoints.
- Currency Controls. Some countries may have limitations on currency controls. For instance, due to the Russian invasion, Ukraine had to limit currency outflow to protect the local currency and price stability. Our platform doesn’t allow the circumvention of these limitations. By trading on our platform, users from one country (in this example, Ukraine) can trade their crypto and Ukrainian currency. The fiat currency transactions will need to abide by Ukrainian regulations. Thus, the currency will never ‘exit’ Ukraine and P2P payments will adhere to regulations since traditional, regulated payment methods are used.
- Tokens Potentially Recognized as Securities. From discussions in the US, we understand that some of the crypto assets might be recognized as securities. We may need to adjust how our platform operates if such recognition happens. This is one of the reasons we don’t offer the sale of the Finja Token, so it can’t be recognized as an investment.
These are basic points, which we could also call our guiding thoughts on being compliant with the letter and spirit of regulations. We will continue to update our thinking as things develop.
Date: July, 25th 2023