Tainted coins are an overlooked problem.

While all Bitcoin may be the same at the time of mining, the way they get used varies heavily. A portion of the cryptocurrency ends up being used even for crimes. When coins are caught associated with crimes, they get labeled as such by chain analysts, making these coins a high risk purchase as they could be confiscated by regulators and/or security agencies. Such incidents would lead to a total loss of capital.

At present, most exchanges have little to no concern of fungibility as only a handful of companies presently take cryptocurrency regulation as a serious matter. However, the tide is shifting, especially since the recent 5th AML Directive, which includes specific targets for Crypto operators. As governments further scrutinize crypto payments, fungibility could become a major issue as it becomes possible to assess and push aside coins that were involved in illicit activities. Consequently, simply buying any coin on an exchange or OTC channel could be a risk as acquisition of tainted coins would lead to loss of investment. Yet this matter is largely overlooked by the industry.

A Notable Exception

A new institutional grade exchange called AAX is pulling the standards of traditional asset trading to Crypto.

AAX is pulling the technology, security, and compliance protocols used by traditional exchanges. Its stand-out technology is the use of LSEG for the orderbook and matching engine. This technology, currently applied by the London Stock Exchange, makes the exchange robust enough to handle overloads which are typically witnessed during peak volume sessions; thus, the problem of system failures typically surfaces when it’s imperative to not have the problem. LSEG technology is able to handle the trade volumes of the London Stock Exchange, which sum to magnitudes greater than the daily volume of any individual crypto exchange.

While technical excellence is a necessity, exchanges need to account for the turbulent nature of the Crypto regulatory sphere. Particularly, compliance with authorities to avoid processing of illicit coins is of paramount importance.

While exchanges are moving towards struct KYC/AML policies, they intentionally avoid chain analysis. This gives them the ability to neglect responsibility of validating source of coins. An infamous example is of Huobi processing cash-outs for the PlusToken scam. On the other hand, AAX accounts for source of coins to avoid high-risk coins entering the exchanges’ wallets, thereby protecting the customers from potentially losing their entire investment in case authorities pin down the purchasers of tainted assets.

A Focus on Institutions

While the typical exchange is aimed at retail traders, offering gateway solutions to the Crypto world, AAX offers advanced futures trading. This is where the need for regulatory precaution and a robust engine show clear importance: the exchange is offering advanced solutions to fit the needs and requirements of institutional traders.

At a time when global markets face severe turbulence, digital assets may potentially come out as proven hedges against the traditional market. This scenario already has many deep-pocketed traders betting on the potential for Bitcoin to become a standard hedge against traditional assets.

AAX has joined the LSEG forum to legitimize its role in the potential pivot Bitcoin may face in terms of interest, shifting from primarily retail interest to heavy institutional involvement. The exchange’s dedication to compliance has given it support from the LSEG community, giving it a global base of early institutional interest to build deep liquidity early on, while having an active OTC market as-well. These features are already fulfilling growing new interest from institutions.

Public Offering

To align its goals with the community's success, the exchange is issuing a token.

The initial listing price is 1 USDT per AAB. Out of a total of 50 million, 10 million AAB will be made available for sale in a series of four rounds according to the following schedule:

The sale is accessible here: https://aab.aax.com/en/