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Cryptocurrency exchange Binance lost 3 percent of its customers due to mandatory KYC requirements

Binance explained that for users concerned with the ethos of anonymity via decentralized blockchain, "losing anonymity is a high price to pay especially when they submit their KYC details to centralized cryptocurrency exchanges

By: Tech Desk | Pune |
Updated: November 20, 2021 5:21:55 pm
Bitcoin, Bitcoin price, Binance, Bitcoin rally, Bitcoin crypto-currency, Bitcoin price, Bitcoin Elon Musk, Elon Musk Dogecoin, Elon Musk Bitcoin investmentBinance CEO Changpeng Zhao (CZ) in this file photo. (Image source: Binance)

The Chief Executive officer (CEO) of the cryptocurrency exchange Binance, said at least 3 percent of the company’s users left the exchange after know your customer (KYC) processes were made mandatory.

Like other financial institutions, major cryptocurrency exchanges across the globe make KYC, or identity verification mandatory in order for users to receive uninterrupted access to their services. “Binance allows customers to create accounts, use basic functions and perform limited transactions without submitting KYC information. In order to gain full access and increase higher deposits and withdrawal limits, customers will need to complete the KYC verification process,” the company said in a blog post.

Changpeng Zhao, the company’s CEO told Bloomberg, “We have chosen to go with full compliance, full mandatory KYC for global users, for every feature. We feel that being compliant will allow more users to use us. Most people do feel more comfortable using a licensed exchange. Most people – 96 percent, 97 percent of users – go through KYC. We only lose 3 percent of the users.”

Earlier, Binance pointed out that its decentralized, no-physical-headquarters was a benefit, but Zhao said in July “that the exchange is eager to collaborate with local regulators to be licensed everywhere,” Cointelegraph reported.

The crypto exchange explained that for users concerned with the ethos of anonymity via decentralized blockchain, “losing anonymity is a high price to pay especially when they submit their KYC details to centralized cryptocurrency exchanges,” the company asserted. “While cryptocurrency exchanges promise to treat users’ private information with care, many people who prefer to maintain anonymity don’t want to take that chance. These fears are not unfounded since many exchanges still do not have robust KYC systems to secure consumer information.”

Meanwhile, more than 50 percent of cryptocurrency owners regard crypto as a source of income, with 15 percent considering it as their primary source of income, according to a report released by Binance Research.

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