How many people have left Binance because of mandatory identity verification: Exchange chief’s response
At the end of July, Binance, the largest cryptocurrency exchange, announced new restrictions on withdrawals from its platform. A month later, the platform’s main requirement was to require customer KYC (Know Your Customer) verification to combat fraud and money laundering. However, the KYC procedure, seen by many cryptocurrency enthusiasts as a means to combat anonymity, had little impact on the exchange’s business model. It appears that the new requirements have deterred relatively few people from Binance.
As a reminder, KYC is a common practice among almost all major crypto exchanges. Usually, this procedure must be passed in order to significantly increase the withdrawal limit. To undergo KYC, passport selfies and other identification documents are most often required. These can be bank statements, proof of residence and so on.
For the simplest identity verification procedure, they usually ask for the first and last name, country of residence, and email address. The most in-depth verification requires data from a bank. In this way, representatives of the trading platform make sure that the person is exactly who he or she claims to be. And at the same time lives in the specified country.
In general, the identity verification procedure looks something like this. Although, representatives of stock exchanges ask to be photographed without glasses and headgear
In general, the proof of identity is of a precautionary nature. It is needed in order to deal with law enforcement authorities or other representatives of the law in case the latter have any questions to a particular user. The data itself is stored encrypted by the exchange and is not shared with any government authority unless necessary.
The Binance exchange announced the introduction of mandatory identity verification on August 20, 2021. The innovation was introduced gradually, and the gist of it was that users without showing their IDs would not be able to cancel orders and face withdrawal restrictions.
How many clients left Binance?
The answer was given by the exchange’s CEO Changpen Zhao himself in a recent interview published by Cointelegraph. According to him, Binance only lost about 3 per cent of customers after the KYC was introduced.
Binance
Perhaps one of the main reasons for introducing KYC to Binance was the severe pressure many financial regulators put on the exchange. It has had a decentralised management network since its inception: Binance doesn’t even have an officially registered head office.
Binance CEO Changpen Zhao
Zhao said in an interview that proof of identity would make Binance a more “legitimate” exchange in the eyes of many large investors, which would certainly help boost its revenue and popularity on a global scale. In addition, Changpen has repeatedly stressed that it is the interaction of cryptocurrency exchanges and other similar platforms with regulators that will make the industry more popular in the short term and promote its development.
It should be noted that Binance is now actively working on its reputation and representation of the cryptocurrency industry in the eyes of people unfamiliar with it. In particular, the day before, employees launched an advertising campaign that urged people not to believe news headlines regarding digital assets, because "there is a whole world behind Bitcoin and Dogecoin".
They also voiced ten fundamental rights of coin users. Among them are not only the obvious points about the right to privacy, but also the need to increase one's own knowledge of the industry. That said, the main message in the manifesto is precisely to regulate the niche. As Binance noted, "regulation and innovation are not mutually exclusive".
Read more about the exchange’s new idea in a separate article.
Binance website about rights of cryptocurrency users
We believe that the current situation indicates that the cryptocurrency industry is more mature than it used to be. Still, traders and investors are not trying to hide their connection to digital assets, and more and more states are recognising it. Identity verification has therefore not become an issue for most people. That said, traders who don't want to be identified are probably using decentralized exchanges - and no one is likely to be able to stop them.
What do you think about this? Share your opinion in our Millionaire Crypto Chat. There we will discuss other important developments related to blockchain and decentralization.
Related posts
