Crypto Companies Will Pay More for Compliance
Following the failure of FTX and Coinbase’s decision to settle with New York state authorities and pay $100 million in the first week of January, it appears that more firms are interested in beefing up their compliance teams.
Kraken, a cryptocurrency exchange, is one of them, and it has been investing in new team members as well as its compliance department. Despite the fact that the firm had to dismiss workers in November, the number of employees dealing with anti-money laundering and KYC verifications and standards has risen by 55% in the last year. To avoid costly enforcement proceedings, Kraken has opted to stick to its guns and guarantee that its compliance team is unaffected by the layoffs.
Binance, another crypto giant, is also becoming aware of rising legal scrutiny directed at the company. Investigators from multiple states in the US are investigating the corporation and the companies it has dealt with on American territories. While a more stringent enforcement action against Binance is unlikely to happen, it demonstrates that even Binance must work on ensuring that its goods, offer, and services adhere to regulatory guidelines.
Companies are aware that, in the current situation, enforcement actions cost them more than they would have spent on employing a large compliance staff capable of providing the appropriate degree of protection to preserve operations.
According to Tim Byun, the government relations officer of the OKX crypto exchange, the fees may easily increase or double.
However, while some corporations aim to be more compliant, others are abandoning the industry entirely, with Silvergate reassessing its exposure to cryptocurrency and Metropolitan Bank terminating all links completely.