Compliance in Crypto

By Alex McCorkindale, Head of Compliance at Easy Crypto


Why is it Important?


Cryptocurrency is becoming less a tool for criminals confined to dark web activity. Instead,

many everyday investors are now looking to diversify their portfolio with some crypto, and

there are even crypto credit cards that let you buy your groceries, clothing and even that

Friday bevvy using your own crypto!


With so many emerging use-cases for Bitcoin and other cryptocurrencies, it’s no surprise

that the regulators have started to look at ways in which digital assets like these should be

regulated.


In NZ, cryptocurrency companies (also called Virtual Asset Service Providers, or “VASPs”)

were brought in to DIA regulation with the other Phase 2 entities, and since then it’s been an

exciting (but challenging) few years.


What Does Compliance in Crypto Look Like?

Alex McCorkindale Head of Compliance at Easy Crypto
Alex McCorkindale, Easy Crypto

Any financial instrument is vulnerable to being abused for money laundering or the financing of terrorism, and cryptocurrencies are no exception! So, as have other reporting entities over time, NZ crypto companies were pushed to wade into the waters of compliance and the journey of understanding exactly how AML/CFT looks in their space.


We are always working to improve our systems and processes in this new and fast-paced industry! Part of this is also trying to work with the regulators to help them understand what AML/CFT currently (and could potentially) look like in the crypto space.


Here's a brief glimpse of what compliance in crypto looks like to date:


KYC/CDD

Customers are on-boarded at the sign-up stage, with their ID and address verified.


EDD

Enhanced due diligence is performed where required by law/legislations, including the collecting source of funds (both fiat and crypto) evidence.


Account and Transaction Monitoring

Account and transaction monitoring includes (but isn’t limited to): Automatic monitoring systems & Manual monitoring techniques.


Spend Limits/Tiers

New customers’ spending is limited until we have collected and are satisfied with the relevant source of funds evidence. This includes both the NZD that will be used to purchase, and any externally sourced crypto a customer is looking to sell.


Compliance Reviews

Accounts are monitored by compliance teams for regular checks where needed.