There are around 500 platforms on the Internet allowing to trade digital assets. However, not all of them deserve trust. Experienced investors know that the safest place to buy crypto is to choose a platform that complies with the requirements of AML and KYC.
We have to appreciate the importance of optimizing cryptocurrency exchanges to help make them more ethical. The two most important things we can do in this regard involve reducing the carbon footprint of cryptocurrencies (which involves investing in the most sustainable cryptocurrencies) and helping fight criminal activity tied to cryptocurrency networks.
Sustainability is Becoming a Primary Concern for Cryptocurrency Exchanges
Cryptocurrencies like bitcoin and ethereum are criticized for their environmental impact. Bitcoin mining alone uses enough electricity to boil water for all UK tea drinkers for 30 years. However, efforts are being made to create eco-friendly alternatives.
Renewable energy, energy-efficient protocols, and carbon footprint offsetting are some of the initiatives being explored. TRG Datacenters predicts the emergence of sustainable cryptocurrencies and changes in existing practices. Nano, IOTA, and chia are leading the way in reducing the environmental impact of transactions.
One of the ways that we can make the cryptocurrency industry more sustainable is by encouraging people to invest in eco-friendly cryptocurrencies. Since bitcoin is not known for sustainability, its collapse has helped lift up more sustainable digital coins.
Of course, there are also ways to make bitcoin more eco-friendly as well. Other options to make bitcoin and other cryptocurrencies that are not known for being environmentally friendly more sustainable is to rely on recycled energy or wasted energy.
Experts from EZ Blockchain point out that bitcoin can be used as a store of value for renewable energy. It converts local solar and wind power into a globally traded digital asset with unlimited shelf life. Bitcoin mining can be made more sustainable by using wasted energy such as flared gas. This way, Bitcoin acts as a recycler and uses otherwise wasted energy to mine new tokens. Cryptocurrency becomes more sustainable by acting as either a recycler or a battery.
Use New Technology to Help Reduce The Risk of Crime with Cryptocurrencies
Another concern with bitcoin and other cryptocurrencies is that they are frequently used to commit crimes. Therefore, crypto exchange managers that want to make sure they are used ethically should find ways to reduce the risk of fraud, money laundering and other forms of criminal activity.
The risk of criminals using cryptocurrencies is often exagerated, but it is still a serious risk nonetheless. Illicit activity in cryptocurrency is a small, but increasing, portion of overall activity. In 2022, around 0.24% of all cryptocurrency transactions were linked to illicit activity. This is a rise from 0.12% in 2021, as reported by Chainalysis.
The good news is that there are steps that we can take steps to fight crime on cryptocurrency exchanges. This can help make the industry more ethical.
Looking for the safest crypto exchange you should always check out if a platform complies with AML requirements. AML stands for “anti-money laundering” – a legal and regulatory system that helps detect and prevent money laundering activities. This system ensures that assets are not used to facilitate illegal financial transactions. AML is essential for crypto exchanges. Let’s see how it works for safeguarding investments.
The Role of AML
Read the following aspects where AML turns out to be a key factor:
- Mitigating money laundering risks. Money launderers find crypto assets appealing because they offer anonymity, ease of access worldwide, and quick cross-border transfers. AML regulations assist crypto exchanges in implementing effective measures to reduce the risks of money laundering. Adhering to AML guidelines, exchanges can avoid their platforms being utilized for unlawful activities.
- Regulatory compliance. Exchanges are being regulated by financial regulators to prevent financial crimes. By enforcing AML regulations, exchanges must follow laws, regulations, and reporting requirements. Compliance promotes trust in the industry, encourages the lawful use of cryptos, and discourages criminal behavior.
- Transaction monitoring. Crypto exchanges must comply with AML regulations by using transaction monitoring systems that analyze patterns, volumes, and characteristics of transactions to detect suspicious activities. This includes identifying unusual or large transactions, frequent transfers, and transactions involving high-risk jurisdictions.
- Reporting suspicious activities. Exchanges are required by AML regulations to inform the authorities of any suspicious activities. This involves submitting reports such as Suspicious Activity Reports (SARs) or Suspicious Transaction Reports (STRs) whenever transactions or customer behavior seem weird. When exchanges report such activities promptly, it helps in the overall efforts to fight financial crimes such as money laundering.
- Reputation and trust. To attract users and gain the trust of customers and regulators, exchanges need to maintain a good image. By putting in place strong AML measures, the exchange can show its commitment to compliance and become a secure and reliable platform. This builds trust in the crypto industry overall and enhances its credibility.
To safeguard against money laundering risks, AML measures are crucial for crypto exchanges. By complying with AML regulations, exchanges can prevent illicit activities, abide by applicable laws, and help maintain the credibility and trustworthiness of the crypto ecosystem. We recommend a secure crypto exchange that complies with regulations and operates officially – WhiteBIT. Visit its official website and read the documentation to make sure about that.
We Need to Focus on Making the Cryptocurrency Industry More Ethical
There are a couple of major ethical considerations that we have to focus on when dealing with cryptocurrency exchanges. We need to make sure that digital coins can be eco-friendlier and take steps to fight fraud. The solutions listed above can go a long way towards helping us reach these goals.
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