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Huobi Transitions From Current HUSD System to New ERC-20 Token

In the coming days, Huobi will change over from its current HUSD system to the new ERC-20 token.

Huobi cryptocurrency exchange will transition its HUSD token from its current stablecoin system to an ERC-20 token through a partnership with crypto startups Stable Universal Limited and Paxos Trust Company.

Per a press release published on July 17, Stable Universal will develop a new ERC-20 HUSD Token, which will be pegged to the United States dollar and held in reserve by the New York State Department of Financial Services-regulated custodian Paxos. Huobi will be the first platform to list HUSD Token.

In the coming days, Huobi will change over from its current HUSD system to the new ERC-20 token, which will subsequently be available on other cryptocurrency exchanges, wallets and platforms.

Throughout the process, Stable Universal will let users purchase HUSD on a one-for-one basis for U.S. dollars, while Paxos will manage the Know Your Customer and Anti-Money Laundering procedures for account openings on Stable Universal. Additionally, Stable Universal will work with third parties to conduct smart contract audits and on-chain transaction monitoring.

Richmond Teo, Paxos co-founder and CEO of Paxos Asia, said that “we are proud to now offer trust-as-a-service to power HUSD Token, a new stablecoin for Huobi Global. This is a new model that allows other innovators to create safe, trusted and fully-backed solutions that support wider crypto-market adoption for cash and assets using our unique regulated status.”

In late June, Huobi announced that it will be moving aggressively to the Turkish market over the next 12 months, since the country has a “very important and promising prospective market.”

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Multiple Exchanges, One Account: Crypto Platform Aggregates Popular Services in One Place

A new aggregated exchange is enabling users to access an array of established crypto services in one place, all while offering trading discounts.

A crypto company is launching an aggregated exchange that enables users to trade across multiple platforms while using a single account.

TokenClub says its unified system is designed to tackle four problems currently facing the industry: convenience of trading, quality, costs and risks.

The new service means access to platforms such as Bittrex, Binance and OKEx is streamlined and delivered in one place — with commission fees that are much lower than those seen on rival exchanges, the team says.

A complementary crypto wallet has also been developed, which supports a range of digital currencies including Bitcoin, Ether, Bitcoin Cash, EOS and Litecoin. More coins are expected to be added in the not-too-distant future.

Other features in the pipeline include margin trading, smart routing, blockchain, automization, strategic hosting and auto-documentation. It is hoped that these capabilities will make life easier both for professional traders and more inexperienced crypto enthusiasts.

A complete ecosystem

According to TokenClub, the current processes associated with registering for a crypto exchange are cumbersome. A full application form needs to be filled out and a secure password must be chosen. For traders who want to operate across multiple exchanges in order to access a broader range of trading pairs, repeating these steps over and over can be frustrating — and it’s also hard to keep on top of passwords for each one.

TokenClub is available here

TokenClub says it has tackled this problem head on by offering a single interface with uniform features. As well as being convenient, the company says this eliminates the need for traders to navigate their way around each exchange individually, as differences in design can make it difficult to complete transactions quickly. Discounts are also being offered to reduce the costs associated with making a trade — an expense that can begin to quickly add up over time.

One of the company’s main motivations has been creating a complete ecosystem in which a community comes together for more than the ability to trade instruments. TokenClub says its vision is to build an environment where users can interact with one another and access all of the information they need to make astute decisions, “creating a place where crypto enthusiasts can spend most of their time without a need to seek other platforms to fulfill their desires.”

Across all platforms

TokenClub says its products are available on smartphones, tablets and PCs — delivering market information, live broadcasts and simulations on demand. Estimates from the company suggest that more than 500,000 people are active members of its community.

Over time, the business has bold plans to expand into new sectors, including gaming, e-commerce and social networks — creating an environment where TCT, the platform’s native currency, delivers real value and a plethora of use cases.

Already, a consulting service delivers daily market analysis and insights into trends, while a social community enables TokenClub users to reach out to their friends and colleagues through built-in instant messaging. The company says more than 400 live shows have been hosted on its platform, attracting 20 million visits, while games and contests aim to make blockchain and cryptocurrencies fun and accessible to all.

Learn more about TokenClub

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Huobi Expands to Turkey Where 20% of the Population Hold Crypto

Huobi is expanding into Turkey, the country with the highest reported per capita rate of crypto ownership worldwide.

Huobi exchange will expand its operations to Turkey, planning to have a crypto-to-fiat onramp for Turkish users by the end of 2019, according to a press release on June 26.

The Singapore-based crypto exchange will be “moving aggressively” to the Turkish market over the next 12 months, since the country has a “very important and promising prospective market,” Huobi Global CEO, Livio Weng, said in a Huobi-sponsored meeting in Istanbul.

According to the press release, Huobi’s new expansion plans include not only a fiat on-ramp for Turkish lira (TRY), but also localized products, customer services, as well as launching a branch office in the country. Huobi’s entrance to the Turkish market will be overseen by official branch of Huobi Group, Huobi Middle East, Africa, and South Asia (Huobi MENA), which is based in Dubai.

Huobi MENA co-founder Mohit Davar said that the platform has already added a Turkish language option to the Huobi Global website, and is planning to launch Turkish language customer support and mobile app soon.

Huobi’s new expansion move has been driven by the popularity of crypto in Turkey. Citing data from Statistica’s Global Consumer Survey for 2019, Huobi stated that 20% of Turkish residents now hold some form of crypto, which is the “highest per capita rate of cryptocurrency ownership of all nations surveyed.”

Indeed, cryptocurrencies such as bitcoin (BTC) have become increasingly popular in Turkey, particularly as the country’s national currency, the lira, saw significant devaluation in 2018.

Recently, United States crypto exchange and wallet service Coinbase expanded USD Coin (USDC) trading to customers in 85 countries, including Turkey.

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Blockchain-Based Alternative Investment Firm to Be Listed on Bloomberg Terminal

Cadence is believed to be the first digital asset to obtain a Financial Instrument Global Identifier, known as FIGI for short.

A blockchain-based alternative investment provider that tokenizes commercial debt is being listed on the Bloomberg Terminal, according to a news release published on June 4.

Cadence is believed to be the first digital asset to obtain a Financial Instrument Global Identifier (FIGI), enabling professionals who use the Bloomberg Terminal to research its offering and execute trades.

The company connects investors with businesses that need to borrow money in order to plug temporary gaps in their cash flow. On its website, Cadence says the minimum investment amount is $500, giving consumers “opportunities traditionally reserved for institutions.”

Currently in private beta, Cadence claims its platform allows investors to generate passive income and hedge against market volatility. Every deal matures within a year, and the company is aiming to deliver annualized returns of more than 10%.

In the news release, Bloomberg Head of Data Standards and Strategy Richard Robinson said:

“The assignment of a FIGI to digital assets is a natural and simple example of the standard’s native utility. It is proof that FIGI can easily extend to new, even esoteric financial instruments.”

Last June, the Bloomberg Terminal started listing Huobi’s Cryptocurrency Index, which tracks the performance of the top 10 traded assets on its exchange.

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What Crypto Exchanges Do to Comply With KYC, AML and CFT Regulations

Top fiat-to-crypto exchanges are adopting market surveillance technologies. Of all crypto-to-crypto exchanges, only Binance has one.

While it’s possible to buy top cryptocurrencies like bitcoin (BTC) and ether (ETH) in the over-the-counter (OTC) market, most people will need an exchange in order to buy other altcoins. Exchanges are simply an important component of the system that makes the crypto market tick. Regulators around the world have identified this, which is why regulatory moves have primarily targeted exchanges. Regulators want to be sure that exchanges employ the best security practices as well as measures — Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT), for instance — that discourage illicit transactions and improve account/wallet security.

Some exchanges do take their compliance to those measures seriously. For example, in the aftermath of the Binance hack on May 7, when around 7,074 bitcoins (worth $40 million on the day) were stolen, the company’s founder and CEO, Changpeng Zhao, announced that a significant security update will be conducted that will also include an upgrade to the KYC measures:

“We are making significant changes to the API, 2FA, and withdrawal validation areas, which was an area exploited by hackers during this incident. We are improving our risk management, user behavior analysis, and KYC procedures.”

So, let’s break down if such a stance over compliance with measures like KYC, AML and CFT is common among top cryptocurrency exchanges, and how much of an effect they have on the market and its participants.

What are KYC, AML and CFT

Each country has its laws governing KYC, AML and CFT measures. However, these laws do not come with specific standards, mainly because regulators want financial institutions to do all they can to reduce risks.

“The reasoning seems to be that if banks get clear guidelines on what constitutes adequate KYC they will never look any further than the minimum requirements,” John Callahan, chief technology officer at Veridium, an identity and access management software company, wrote in Forbes.

Know Your Customer

Know Your Customer, refers to a set of procedures and process that a company employs to confirm the identity of its user or customer. The robustness of KYC procedures varies across companies and jurisdictions. However, KYC fundamentally involves the collection and verification of a customer’s means of identification — including government-issued identity cards, phone numbers, a physical address, an email address and a utility bill, to name a few.

Anti-Money Laundering

Anti-Money Laundering measures are a set of procedures, laws and regulations created to end income generation practices through illegal activities. Some of them include tax evasion, market manipulation, public fund misappropriation, trade of illicit goods and other activities of this kind.

AML regulations require financial institutions to continuously conduct due-diligence procedures to detect and prevent malicious activities.

Anti-Money Laundering

The crypto industry has already been cited as facilitating a “rise of a new, high-tech era of virtual money laundering,” with cryptocurrency gambling sites reported by blockchain research house CipherTrace as being a common money laundering tool. In addition, Jamal El-Hindi, the former acting director of the Financial Crimes Enforcement Commission (FinCEN), a part of the United States Department of Treasury, hinted that AML compliance will be fundamental to the stability of crypto exchanges in the coming years:

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate US AML laws.”

Combating the Financing of Terrorism (CFT)

Combating the Financing of Terrorism refers to the set of procedures aimed at investigating, dissecting, discouraging and blocking sources of funding intended for activities that realize religious, ideological or political goals through violence, or its threat thereof, against civilians. These procedures provide law enforcement agencies with an alternative, and potentially effective way to track and block terrorist activities.

Yaya Fanusie, the director of analysis for the U.S. Foundation for Defense of Democracies Center (FDD), earlier in September 2018, told the U.S. Congress that terrorist organizations aren’t using cryptocurrency as a funding vehicle. However, the U.S. House of Representatives, on Sept. 26, passed a bill that would establish a task force to fight the use of cryptocurrencies by terrorist groups.

How crypto exchanges approach KYC, AML and CFT compliance

As stated earlier, the process of regulatory compliance for AML and CFT involves KYC throughout transaction lifecycles. The KYC process is generally divided into four levels, namely:

  • Customer acceptance policy (CAP), which is the stage where a company determines and documents the demographics of its desired customers.
  • Customer identification program (CIP), which is the stage where the company confirms that the identity of a (potential) customer matches its CAP.
  • Continuous monitoring of transactions to ensure regulatory compliance, identification of suspicious activities and risk management.
  • Risk management

Based on the information available, it can be examined how exchanges handle these stages. Crypto exchanges will be divided into two groups namely the “fiat-to-crypto” exchanges and “crypto-to-crypto” exchanges. Fiat-to-crypto exchanges are the gates for new fiat money to enter the cryptocurrency market. These exchanges allow users to exchange fiat currencies like dollars for bitcoin, ether or any other supported cryptocurrency. Crypto-to-crypto exchanges, on the other hand, primarily allow users to exchange one cryptocurrency for another.

Fiat-to-crypto exchanges

A few top fiat-to-crypto exchanges include Coinbase, Coinbase Pro, Gemini, Bittrex, Kraken, Bitfinex and Bitstamp.

Fiat-to-crypto exchanges

Fiat-to-crypto exchanges typically perform at least some level of KYC because they deal with fiat money. This forces them to conduct business with banks and other traditional financial institutions, most of whom conduct KYC procedures before doing business with any entities.

Coinbase

Coinbase is a licenced crypto exchange based in the U.S. A full list of the licenses it holds is here. All that the exchange requires to open an account is a full name, an email address and a password. While this means that anyone from anywhere in the world can store, send and receive cryptocurrencies using a basic Coinbase account, ID verification is required to buy and sell cryptocurrency in the 33 countries it supports.

For its KYC, Coinbase chose Jumio’s digital identity solution Netverify in an attempt to be regulatory compliant while still delivering a smooth customer experience. In a bid to further mollify regulators, the company hired former New York Stock Exchange executive Peter Elkins to build the Coinbase Trade Surveillance Program, an initiative to monitor the markets with the aim to weed out bad actors.

Gemini

Also licensed by the U.S. government, Gemini, unlike Coinbase, conducts KYC before allowing anyone to use its platform. On its user agreement page, Gemini states at least 13 regulations — including FinCEN, AML and CTF regulations — to which the users of its platform must be compliant. The exchange was launched in 2014 by brothers Cameron and Tyler Winklevoss.
At the start of the second quarter of 2018, a few months before Coinbase’s trade surveillance reports surfaced, Gemini partnered with U.S.-based stock exchange Nasdaq, which is one of the two largest exchanges in the world, for the deployment of Nasdaq’s SMARTS Market Surveillance technology to track market manipulations and fraudulent trades. The surveillance moves from both Gemini and Coinbase put them in the third stage of the KYC process.

Bitstamp

Bitstamp requires ID and address verification before users can start trading on the platform. In the wake of surged interest in bitcoin, the exchange partnered with Onfido in February 2018, a digital identity verification provider, to handle its KYC to the end in order to make the customer onboarding process frictionless. Bitstamp was originally founded in Slovenia in 2011, but moved to the United Kingdom in 2013, and then to Luxembourg in 2016.

On Nov. 5, Bitstamp chose Cinnober’s crypto trading system for its exchange. Cinnober claims that its trading solution is built for regulatory compliance. The solution also employs Irisium’s market surveillance technology for risk management. Cinnober boasts a list of customers, including the NYSE, the London Stock Exchange, Euronext, and the Johannesburg Stock Exchange, to name a few.

Bitfinex

Developed by fintech company iFinex, Bitfinex allows crypto users to open an account and immediately deposit, trade and withdraw crypto without identity verification. However, verification of a phone number, a residential address, two forms of government-issued ID and a bank statement is required to deposit and trade fiat currencies.

Earlier in the year, Bitfinex employed Irisium’s market surveillance technology to detect fraudulent behavior on its exchange. Bitfinex is based in Hong Kong.

Bittrex

Bittrex requires ID verification before allowing users to deposit, trade or withdraw cryptocurrencies. However, other than having a user agreement page that says its operations comply with KYC, AML and CTF policies — as does every other exchange — it is unknown if the exchange employs a market surveillance technology or plans to do so.

Kraken

Kraken launched following two years of product development and beta testing, making it one of the oldest crypto exchanges. It has five tiers of verification (tier 0 to 4) requirements, depending on users’ intent to use their account. Kraken founder Jesse Powell decided to build the exchange after seeing the struggles of the then-largest — but now defunct — crypto exchange Mt. Gox.

Kraken

Unlike Gemini and Coinbase, Kraken doesn’t appear to have any publicized surveillance program. All that is known comes from a Kraken blog post that was issued in response to the New York attorney general’s questionnaire. The company said:

“We currently employ nearly 200 people (more than 25% of the company) in compliance-related functions. As of Q1 2018, we are processing more than 1 law enforcement request per day, seven days a week.”

At the end of the second quarter of this year, a Bloomberg report called out irregularities involving certain tether trades on the Kraken exchange. John Griffin, a professor of finance at the University of Texas, told Bloomberg that the irregularities noticed are “suggestive of wash trading.” This technique is sometimes employed by traders, who act as both seller and buyer in a given transaction, to give a false impression of supply and demand. This act in itself is illegal. Kraken discredited the content of the report in a blog post. “It’s not clear what harm could come from wash trading of a pegged asset against its peg,” Kraken wrote.

Crypto-to-crypto exchanges

Based on data from CoinMarketCap, top crypto-to-crypto exchanges include OKEx, Binance, Huobi, HitBTC, Bibox, ZB.com, Coinbene and LBank.

Crypto-to-crypto exchanges

Binance

Binance, being a pure cryptocurrency exchange, isn’t as exposed to regulations. Therefore, it allows withdrawals of up to 2 BTC per day without any form of ID verification. For withdrawals up to 100 BTC per day, it requires photo ID verification.

OKEx

OKEx, which partially allows fiat trades, has three levels of verification. Level 1 users have a transaction limit of $10,000 per order or $2,000 for fiat trades, and are required to provide a government-issued ID during verification. Its level 2 allows for trades over $10,000, and requires document verification. Level 3 is for trades above $200,000 and involves video verification.

HitBTC

HitBTC doesn’t perform any form of ID verification at account opening. Users can deposit and trade crypto without going through any KYC procedures. However, the exchange advises users to verify their identity by sending in the usual KYC documents, including bank documents, to its compliance department via email to “avoid eventual verification procedure in the future.” Users have taken to a number of social media channels to complain that HitBTC allegedly limited their accounts, with the exchange operator asking them to verify their identities.

Huobi

Huobi doesn’t appear to require any KYC documents before allowing users to trade, but it does have an ID verification section in the settings area of a user’s account. It appears to only enforce KYC when users reach a certain account usage limit. In addition, Huobi has different withdrawal limits for verified and unverified users.

Bibox

Bibox allows users to trade up to 2 BTC per day without any form of KYC verification. For trades up to 20 BTC per day, it requires a passport verification. On its website, Bibox advises users who want a higher limit to reach out to its support team via email. All that is required to deposit funds and start trading with Bibox are account security measures, including SMS and Google authentication.

Should crypto exchanges take KYC seriously?

Put simply, similar to fiat-to-crypto exchanges, the top crypto-to-crypto exchanges, as determined by their 30-day volume on CoinMarketCap, have some sort of KYC policy that they enforce at different stages. However, many of them haven’t been proactive about compliance.

“To gain respect and empathy from regulators, crypto exchanges need to be proactive about compliance,”  Tony Mackay, who recently launched the Kryptos-X exchange, said. He went on:

“At the minimum, you want to get the on-boarding stage right, even if the crypto market is currently under-regulated. You also want to ensure that your user registration system can detect and deter criminal activities, using the expertise of best-in-class KYC/AML providers.”

Also, unlike their fiat-to-crypto counterparts, crypto-to-crypto exchanges — except for Binance — haven’t been reported as monitoring or tracking transactions to detect market manipulation or fraudulent behaviors.

Should crypto exchanges take KYC seriously?

In October, Binance partnered with Chainalysis, a compliance and investigation company catering to the cryptocurrency space. As part of the partnership, Chainalysis did a global roll-out of its compliance solution, which has a Know Your Transaction (KYT) feature. KYT is a real-time transaction monitoring solution for cryptocurrencies. U.S. agencies — including the IRS and FBI — are using Chainalysis’ solution to track cryptocurrency transactions.

Is it worth playing by the rules?

A recent report from P.A.ID Strategies, a payments and identity security consulting firm, found that the majority of crypto exchanges “lack sufficient background checks.”

It also claims that exchanges, at best, take a reactive approach to being compliant. Only a few have set up a system for monitoring behaviors and appear prepared to deal with regulators despite the under-regulation of the industry.

A recent emerging trend in the crypto space has been that of exchanges closing their offices in highly regulated jurisdictions and setting up shop in jurisdictions — such as Malta — where the local laws are “crypto friendly.” Binance and OKEx are the most notable examples.

For some crypto firms compliance is a double-edged sword in that on one side, firms ensure that no illicit activity is conducted on their platforms, while potentially compromising on the notion of decentralization on the other side.

In June 2019, new Financial Action Task Force (FATF) guidelines will be imposed that govern AML and CFT activities. The announcement from February states:

“Countries should ensure that VASPs [virtual asset service providers] are subject to adequate regulation and supervision or monitoring for AML/CFT and are effectively implementing the relevant FATF Recommendations, to mitigate money laundering and terrorist financing risks emerging from virtual assets. VASPs should be subject to effective systems for monitoring and ensuring compliance with national AML/CFT requirements.”

There are many who disagree with the tightening of controls, saying that, first of all, it would be difficult to set up domestic regulatory bodies, and in the meantime, companies may suffer as they will become overburden by reporting.

It is also not always possible to know the identity of the beneficiary, whom the destination wallet belongs to and what type of a wallet it is, according to Chainalysis. The company states that it would be more beneficial to collect wallet addresses of bad actors instead of user’s personal information.