Australian Crypto Exchange Blockbid Makes Deal with LexisNexis
Australian cryptocurrency exchange Blockbid is adding know your customer (KYC) services and fraud prevention security in a new deal with LexisNexis Risk Solutions. Blockbid will be the first exchange to use the new system, which was developed after LexisNexis acquired ThreatMetrix earlier this year.
UPDATE: Additional information about Blockbid’s relationship with Bitspread has been added to this piece.
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New Technology Allows for Customer Verification and Fraud Prevention
The LexisNexis technology will allow the new exchange to verify customer identities using both physical and digital identity data, with the goal of flagging high-risk customers during sign up. LexisNexis has two different data sets at its disposable, one of them coming from the February acquisition of cybersecurity firm ThreatMetrix.
That system analyzes connections among locations, devices, identity, and threat intelligence, and combines this information with behavioral analytics to identify high-risk transactions in real time.
It encompasses 1.4 billion unique online identities from 4.5 billion devices spanning 185 countries, while also analyzing over 100 million transactions per day across 35,000 websites from 5,000 customers. Blockbid is reportedly one of the first firms to make use of the new LexisNexis-ThreatMetrix offering.
Alisdair Faulkner of ThreatMetrix said in a statement:
“The ThreatMetrix® Digital Identity Network® collects and processes global shared intelligence from millions of daily consumer interactions including logins, payments, and new account applications. Suspicious behavior can be detected and flagged for review, step-up authentication or rejection before a transaction is processed, creating a low-friction experience for trusted users.”
Blockbid Set to Launch in August
Melbourne-based Blockbid is not yet operational, and plans to launch in August. The company raised around $1.2 million USD in an ICO last year to fund the launch of an exchange which it claims will offer the largest selection of cryptocurrencies for trade.
It appears to be taking a regulation-friendly approach, having already registered with Australian financial regulator AUSTRAC. The deal with LexisNexis is another way to remain compliant with financial industry rules, as it will allow Blockbid to meet KYC/AML requirements.
In addition to cryptocurrency trading, Blockbid is also planning to provide crypto-based asset loans as part of a deal with an Australian credit provider. The firm also joined the Ethereum Enterprise Alliance in March as part of its plans to establish itself as a major crypto exchange.
Further, Blockbid has confirmed to Bitsonline that it is working with U.K.-based hedge fund Bitspread. David Sapper, Blockbid COO & Cofounder, said that, “We are grateful for the on-going support of BitSpread, the leading blockchain asset research and advisory firm, which acts as our liquidity provider.”
The Road to Regulation
To date, the cryptocurrency industry has been largely unregulated, with many exchanges, such as Kraken, having resisted complying with rules that the rest of the financial industry accepts as part of the cost of doing business.
Crypto exchanges in particular deal with this issue, because if they want to offer their customers the ability to convert crypto to fiat and vice versa, they need accounts with traditional banks. But if the exchanges aren’t willing to implement KYC and anti-money laundering (AML) regimes, then most banks are reluctant to take them on as clients.
In recent months, however, established financial services industry players such as Goldman Sachs and NASDAQ have announced plans to enter the cryptocurrency markets. Other established crypto exchanges like Gemini are also making efforts to become compliant with financial industry standards. They and firms like Blockbid see this as the best strategy moving forward.
What’s your take? Are exchanges wise to get ahead of regulations and implement stringent KYC/AML processes?
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