An unregulated exchange is a cryptocurrency trading platform that operates without direct licensing or formal oversight from established financial regulatory authorities in its primary operational jurisdictions.
Mechanism
Such platforms provide venues for the exchange of digital assets, often with fewer stringent requirements for token listings, Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance, or trading practice adherence compared to regulated counterparts. This can attract users seeking broader asset availability or higher leverage.
Methodology
Operating outside established legal and supervisory frameworks introduces elevated risks, including increased susceptibility to market manipulation, security vulnerabilities, and a lack of investor protection mechanisms. These characteristics sharply contrast with the compliance and governance standards expected in traditional institutional finance.
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