Why All the Verification?
For all those new to the crypto world over the last 6 months you have encountered the pain of getting verified on exchanges like Coinbase and Kraken. Verification is required in order to increase your weekly deposit amount and obtain access to a wider variety of altcoins. The verification process is incredibly painful because you have to give your valuable information to a strange company selling cryptocurrencies. It all sounds super sketchy. That’s not even the worst part! The worst part is waiting 5 days while all the coins are exploding higher and higher.
So why do these exchanges require all this verification? Is it because these exchanges are scammy and they’re going to take advantage of the information you’re giving them? Maybe, but probably not. Worst case scenario is they get hacked and your information becomes vulnerable.
Here’s why exchanges require identify verification: In the U.S. if an exchange has custody of funds on behalf of their clients, they are acting as a broker/dealer and are subject to Anti Money Laundering (AML) laws enforced by FINCEN (financial crimes enforcement network).
US based exchanges have to know the source of funds in order to meet their AML requirements, so they must know who you are.
I personally feel fine providing my information to these exchanges because it’s worth it to me to take advantage of the opportunity to invest in cryptocurrencies. Also, these exchanges’ livelihood is based on their security, it is their #1 priority. If they abuse the information they have or get hacked, their business will get destroyed. So far my experience has been very positive with Kraken, Coinbase, GDAX, and Poloniex. I encourage everyone not to get discouraged with the verification process.
This process reminds me of the fear people had with online banking and then connecting their bank information to services like Mint or Venmo. Nowadays, everyone feels completely comfortable with online banking and using these services.
The feeling of uncomfortability using these exchanges makes me think we are still in the early days and the opportunity for significant gains is still available.
Good luck!
Originally published at cryptobuzz.co.