Previous this year, in March, rumours commenced to spread online that leading Bitcoin derivatives platform BitMEX was on the verge of implementing Know Your Customer (KYC) procedures. The exchange was renowned for being a hub where anyone, unless they were in restricted jurisdictions, could trade crypto futures deprived of sending in identification.
CryptoSlate informed on those rumours, which were grounded on a job listing found on BitMEX’s official LinkedIn (and on AngelList) for a fresh role: a BitMEX “AML Operations Manager” to be created in Hong Kong.
The job description encompassed “2 key functions,” one of which mentions the development & management of “conducting customer due diligence for institutional and retail clients onboarding or existing on the BitMEX platform. They will be accountable for the customer screening process connected with AML & Sanctions necessities.” This previous week, KYC was lastly confirmed. The company will be implementing KYC on all clients, with a grace period till initial 2021.
Analysts have mixed views on what this means for Bitcoin, but one takeaway that a majority agree with is that BitMEX imposing KYC on its customers will be bullish for Ethereum’s decentralized finance ecosystem.
BitMEX KYC is “One Amongst the Most Bullish Events for DeFi“
Conferring to Qiao Wang, a former head of product at Messari & a prominent crypto analyst, BitMEX realizing KYC could be massive for the DeFi ecosystem. This is in orientation to how the services BitMEX provides, which may now be unreachable to those without ID or those that do not want to KYC, can be dispersed:
“I’m sure this has been said before, but the Bitmex KYC is one Amongst the most bullish events for DeFi. Weakly structured CeFi platforms have always been some of the biggest competitors for DeFi.“
This sanguinity was echoed by Joseph Todaro, a partner at Blocktown Capital: “Bitmex finally KYCing users. Sure, some of those users will go to other centralized services that are not KYCing (for now). The rest will move into DeFi as we build it out. If you still don’t see the value in DeFi you’re greatly behind the curve.“
Individuals that contemplate BitMEX’s moves to implement KYC are bullish for DeFi focus on Synthetix, a leading Ethereum-based protocol. Synthetix is a protocol concentrating on building markets like decentralized derivatives & dispersed stock trading on Ethereum.
Ethereum itself could get ‘KYC’d‘
The subject is, Ethereum-based protocols & tokens themselves could agonise from KYC. The Financial Action Task Force (FATF), an intergovernmental financial regulation agency, unrestricted a report this June that stablecoins, which are pivotal to the DeFi ecosystem, should be better structured:
“As so-called stablecoins could quickly become available globally, with their functions decentralised across multiple jurisdictions, international co-operation amid jurisdictions is critical to ensure ML/TF risks are appropriately addressed.“
Here are apparatuses being fashioned by developers in the space to KYC users of Ethereum applications, meaning that if the FATF enforces rules, there may be requirements for users to link their identities to addresses before interacting with DeFi protocols.