Deribit Releases Specifics of New KYC Policy Following Move to Panama

In a Jan. 17 blog post, Deribit clearly said that its relocation to Panama has been mainly caused by the new Anti-Money Laundering Directive (5AMLD), a major European law that aims to tackle money laundering and terrorist financing by stricter regulation of crypto-related businesses.

Deribit, a crypto futures and options exchange that is moving from the Netherlands to Panama to avoid Europe’s new Anti-Money Laundering law has released its newly updated Know Your Customer (KYC) policy.

While 5AMLD was enforced on Jan. 10, 2010, 5AMLD has not been adopted in the Netherlands to date, but is still expected to come into force in the upcoming months, Deribit said, adding:

“Due to the ambiguity of the 5AMLD implementation process, it is not known how the new regulation will affect Deribit.”

Panama-based Deribit is coming on Feb. 10, 2020

Deribit originally announced the news on Jan. 9, noting that starting from Feb. 10, 2020, the entire operational platform will no longer be operated by the Dutch company Deribit B.V., but DRB Panama, which is a 100% subsidiary of the Dutch entity. While Deribit’s operations alongside client holdings and system settings are moving to Panama, the company’s servers will be moved to London, the company said.

After the relocation, Deribit will apply new terms of service and privacy policy, which will be “materially similar to the terms of Deribit B.V.”, the firm noted.

Two tiers for KYC requirements to apply in February

However, the exchange will purportedly significantly alter its KYC requirements, according to the announcement. Basically, Deribit will introduce an additional tier of KYC requirements, providing two different KYC levels – Level 0 and Level 1 – in order to prevent illegal activities on its platform. Level 0 will allow Deribit clients to withdraw up to one Bitcoin or 50 ether (ETH) per 24 hours, while no withdrawal limits apply to Level 1.

Specifically, Deribit is planning to register all its current clients as Level 0 clients. Level 0 KYC requirements will require only basic information such as email, name, date of birth and country of residence. Meanwhile, Level 1 requires proof of your identification such as passport or government ID and portfolio margining.

Crypto industry to strengthen AML and KYC compliance

Deribit noted that the exchange reserves the right to immediately close any account on the platform and liquidate any open positions in case it finds out that provided account information such as location or place of residence was false.

The company added that Deribit had partnered with major blockchain analytics firm Chainalysis in order to strengthen its tools for monitoring suspicious crypto transactions.

Deribit is not the first company to change its operating structure due to new KYC and anti-money laundering laws enforced by the European Union. In fact, some companies such as crypto wallet provider Bottle Pay had to cease operations in late 2019, claiming that the regulatory scope would ruin existing user experience.

In contrast, other crypto-related firms in the EU such as U.K.-based CEX.IO exchange claim that they have been fully compliant with the new law as they had been extensively working on its compliance policy since 2014.

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