Regulation may still be an issue for the leading cryptocurrency exchanges but Binance is currently pushing the envelope. After partnering with IdentityMind in March and improving its know-your-customer (KYC) and anti-money laundering (AML) protocols, the exchange has formed another partnership. Announced in mid-April, the deal will see the world’s largest crypto exchange by volume use CipherTrace technology.
Describing itself as the world’s first “blockchain forensics team”, CipherTrace has been developing security standards for cryptos since 2011. From a series of annual reports on the price of Bitcoin versus security hacks, the company has gone on to work with governments, exchanges and more. In 2018, CipherTrace launched two cryptocurrency AML services designed to risk-score transactions and monitor blockchain activity.
Binance Building a Secure Base
Looking to build on its current provisions, Binance will now work with CipherTrace to enhance on-chain security. The end goal is to protect those that buy Bitcoin and other cryptos via the exchange. However, while Binance will reap the immediate benefits of improving trust among its customers, the move should benefit the industry as a whole. As it stands, classic crypto exchanges aren’t subject to official financial regulations. In some respects, this has made them a less attractive to novices than crypto brokers like eToro, which is licensed by the FCA and CySEC.
The lack of formal regulations doesn’t necessarily mean exchanges are unsafe. Conversely, it doesn’t mean brokers are impervious to attacks. However, since the famous Mt. Gox hack in 2014, crypto exchanges have become a target for cybercriminals. For Binance, this is enough of a reason to raise the bar and implement the latest fraud detection and tracking technology. Indeed, by doing this, it will improve its own services and, in turn, force its competitors to do the same. Naturally, for traders, that’s a positive. However, it could also help the image of cryptocurrencies in the eyes of national governments.
CipherTrace and Binance Working to Revolutionise Crypto Trading
CipherTrace to help Binance and the crypto industry as a whole. Image: grapestock/Shutterstock.com
If world leaders see the industry is willing to follow strict regulatory guidelines, they’re more likely to embrace cryptos. What’s more, CipherTrace works with a number of governments that want to understand the mechanics of blockchains and the security standards that are possible. This tacit link to politicians will act as yet another string to Binance’s bow. To put it another way, working with a company that advises governments will make Binance more attractive to any politicians looking to further integrate cryptos into their economy.
Overall, the new relationship between Binance and CipherTrace is great for the community. Although it may not directly boost the price of Ripple (XRP) or other leading altcoins, it will give Binance more credibility. Moreover, it will raise standards and make the industry safer for traders at all levels. Even though it may be some time before regulators develop guidelines for exchanges, it’s encouraging to see insiders are doing everything possible to make trading cryptos safe.
Featured image: Akarat Phasura/Shutterstock.com