Some will argue that BitLicense stymies innovation with blockchain, but I think people don’t understand (or are willfully ignorant) that compliance laws matter. Key Features Bittrex lacked or provided poor solutions to:
- Robust Transaction Monitoring System - this means having a system that can “[assess] historical/current customer information and interactions to provide a complete picture of customer activity. This can include transfers, deposits, and withdrawals.” -SAS UK
Bittrex offered a *“manual transaction monitoring system in December 2018, only capable of handling a small volume of transactions, lacking the comprehensive and accurate risk assessment that must underlie any compliance program.”
- Customer ID - real customer identities are needed to fulfill Office of Foreign Assets Control (OFAC) compliance.
“Bittrex’s grossly inadequate transaction monitoring system is exacerbated by an additional deficiency: incomplete or missing customer identity data…When DFS examiners sampled accounts in 2019, their small sample identified two North Korean accounts. More may exist. At least one North Korean account was active into 2017. At least two Iranian accounts were still active in the Bittrex system when DFS examiners visited Bittrex in 2019, and potentially usable.”
- Listing criteria - " exchanges [have] an obligation to conduct appropriate due diligence on all types of assets, and then obtain approval for them from DFS, as required by the DFS Virtual Currency Regulation"
Bittrex admitted to using an informal process for coin-listing decisions, without systematic documentation. This is just another example of the company’s lackadaisical approach to all aspects of compliance.
This begs the question; will Nash meet these requirements (there are plenty more; these are just the publicized requirements Bittrex did not meet)?