The Digitex exchange and its founder have taken a public stand against know-your-customer (KYC) regulations for digital asset trading platforms. Digitex’s show of defiance against international financial laws may be bold, but the conditions that allowed many platforms to fly under the radar in years past may not last for long.
CEO Adam Todd, who noted he’s a U.S. citizen, announced the decision to remove KYC requirements for Digitex customers in a blog post and livestreamed AMA this week. Calling the regulations “a major friction point” and “a crock of shit”, he said they only served to turn away potential sign-ups and exposed legitimate traders to unnecessary risk from data leaks.
The decision, he said, came after a third-party KYC services provider Digitex used had suffered a data breach, leaking customers’ private identification information.
“It’s a horrible, horrible experience. KYC is going to destroy our business if we go with that,” Todd said in his AMA.
He listed a number of steps Digitex has taken to (hopefully) avoid regulatory attention. His platform prohibits U.S. citizens from signing up—both by blocking U.S. IP addresses and requiring sign-ups to check a box stating they are not U.S. citizens. Additionally, Digitex does not handle fiat currencies or trade them on the exchange.
Some customers watching the live AMA on YouTube expressed support and appeared more interested in when they could buy digitex (DGTX) tokens. Others expressed concern about the legality of the move, but their comments were swiftly removed by chat moderators.
It appears Digitex’s strategy is to avoid trouble by hoping U.S. regulators are more interested in pursuing companies that affect U.S.