- BitMEX is introducing a new KYC system for its users.
- Users will have 6 months to complete identity verification from the date of launch.
- The decision marks a move to regulations found in the traditional finance space.
Bitcoin futures exchange BitMEX will start requiring all users to prove their real world identity on the exchange by August 28 2020. BitMEX claims the launch of its User Verification Programme will promote a “more trusted and secure trading environment for all BitMEX users.”
During the ten year span of cryptocurrency activity, there has been growing pressure on crypto companies to adopt KYC and AML regulations, both commonly used in the traditional finance space. Even libertarian-run exchange ShapeShift eventually conceded to regulators, and now BitMEX is falling in line too.
“We’ve tried to make it a combination of lightweight and easy,” said Ben Radclyffe, commercial director of 100x Group, the new holding company for the BitMEX platform. “Geographical location is quite key for us,” Radclyffe continued.
While this may upset some of BitMEX’s users, it could be good in the long run.
“Crypto exchanges putting in place institutional grade KYC and AML is essential for the further development of the crypto industry as it ensures to keep bad actors away and allows institutional players to be increasingly comfortable with the asset class,” Henri Arslanian, fintech and crypto leader of Asia at accounting firm PwC, told Decrypt.
The process of identification itself should take about five minutes to complete. There is a four step process that BitMEX claims is similar to ID checks on other crypto exchanges. Users will be asked for a selfie, and will be required to answer some questions relating to source of funds and their trading experience.
There is also a practical advantage to user identification, which will allow BitMEX to “reliably verify the actual owner of an account in the event of a dispute, hack, or incapacitation,” claims BitMEX in a blog post published today.
As part of the User Verification Programme launch, BitMEX will also unveil details about a Trading Tournament where prizes will be on offer for those who have verified their identity. But it’s unlikely to appease those affected.