Recent meetings with compliance and regulatory legal firms have made it clear that it will take all of Q4 to clarify and implement the correct KYC/AML processes moving forward. We are being guided by best practice principles and professionals that specifically work in the cryptocurrency legal landscape and who are familiar with global financial regulatory laws.
The Komodo team will provide more information over the course of Q4 2020. This is the most comprehensive announcement for the information we have available right now.
If you haven’t heard about the recent regulatory changes, check out the previous blog post for more context.
The first weeks of Q4 have been intense for everyone involved with Komodo as we figure out how to navigate KYC/AML compliance laws and the new regulation targeting our crypto space. This issue is one we can’t, and shouldn’t, ignore.
AtomicDEX is still an open-source, decentralized, and non-custodial exchange.
This will never change.
Changes concerning two parts connected to the official version of AtomicDEX have to be taken into consideration.
1. The officially supported AtomicDEX liquidity network.
By the time AtomicDEX Stable Beta (v0.4) is released at the end of Q4, parties that wish to participate in trading activities on the officially supported AtomicDEX liquidity network will need to complete a KYC process.
The KYC onboarding process user experience will be similar to that of any major regulated exchange. This measure is being implemented to protect active developers involved with AtomicDEX from being the target of legal repercussions concerning the operation of an unregulated money laundering scheme, and it will only affect usage of the AtomicDEX officially supported liquidity network.
2. Security-like assets.
There is a buyback and token swap concerning security-like tokens that underpin AtomicDEX operations, including assets like DEX token, SuperNET assets, and any revenue-sharing token.
Notably, Jl777 is consolidating some of his assets into vDEX – here is a post summarizing jl777’s consolidation plan. If this affects you then go to the ask-jl777 channel on Discord, and request additional information.
Further information on KYC/AML measures for AtomicDEX will become available as we continue to get guidance from compliance officials.
Note: Have more questions that aren’t answered here? Please read “Standby: The Regulation is Coming.”
- Will KYC/AML compliance impact KMD or Komodo-based chains? No, there won’t ever be any KYC/AML implementation for the KMD coin. It's not possible to add or enforce KYC/AML implementation for any third-party projects that use Komodo technology to create coins on their own independent chains.
- What about if I want to store my assets like BTC or ETH in the AtomicDEX non-custodial wallet? KYC isn’t required if you are planning to only use the AtomicDEX non-custodial wallet. You will only be required to complete a KYC process if you wish to swap assets on the official version of AtomicDEX.
- Will these regulatory changes impact the way that the AtomicDEX protocol functions? No, these changes only impact AtomicDEX at the GUI and officially supported DEX network level. Independent/ third-party projects can still use open-source technology with or without KYC/AML measures. The protocol is permissionless, meaning third parties can add or modify their own DEX networks.
- What about the assets from jl777? What happens to them? JL777 outlined how the assets will be handled in a detailed response found here.
- Can I fork the code and launch my own DEX? Yes, AtomicDEX is open source. Anyone can fork the code and launch their own independent DEX network.
- Am I forced to trade on the official DEX network from Komodo, or do I have other alternatives? There will likely be alternatives. The future version of the official release will possibly enable users to customize their DEX network configuration in order to use alternatives networks. Another alternative is that third parties can use AtomicDEX open source software to create forked DEX implementations and community supported networks.
- What is KYC/AML, and how do other exchanges deal with KYC/AML regulations? Here is an article that explains everything you need to know about how KYC processes generally work for banks, financial institutions and cryptocurrency platforms. Here is another article that explains how other crypto exchanges have dealt with KYC, AML, and CFT laws. Note that the article was published in mid-2019. Recent regulatory changes in certain jurisdictions have led many exchanges to implement stricter limits on the amount of funds that users can trade and/or withdraw without having to complete a KYC check.