Legislators Push for Increased KYC/AML Laws

International financial regulators are increasingly focusing on cryptocurrency as global adoption increases over time.

Regulators around the world continue to crack down on illicit use of cryptocurrency as global mainstream adoption unfolds. What was once considered the wild west of the financial world in regards to anonymity may be soon coming to an end as legislators push for increased know your customer (KYC) and anti-money laundering (AML) requirements for cryptocurrency exchanges operating in their jurisdiction.

Cryptocurrency users in countries such as Canada, Japan, and Singapore may have experienced some new requirements recently when sending cryptocurrency from their favorite exchanges. Coinbase users in these nations will now be required to provide additional information when sending crypto off of the exchange, including what type of wallet the assets are being sent to and personal information regarding the recipient.

For example, Coinbase users in Canada will now be required to provide the name and address of the recipient of transactions of 1000 CAD or more.

These new mandates come as part of a greater revision of existing laws to prevent the possibility of sanctioned countries using crypto to circumvent said restrictions such as Russia. Japan’s Chief Cabinet Secretary Hirokazu Matsuno stated that the nation plans to include crypto exchanges in its existing foreign exchange laws which already require identity verification to legally operate in the state. The European Union is also looking towards expanding the surveillance of crypto transactions by voting on additional KYC/AML regulations that would require financial institutions to attach information on both the sender and receiver of crypto transactions.

While these new mandates may seem jarring at first, the reality is that these types of laws were already a part of the traditional financial system such as wire transfers and were bound to happen to crypto transactions. The influx of mainstream users and institutional adoption of blockchain technology and financial transactions seen in the post COVID world has accelerated the need for proper regulatory clarity regarding the new asset class and technology, and as a result exchanges such as Coinbase have no choice but to either follow these mandates or lose their license to operate in the selected countries.