Changpeng Zhao, CEO of cryptocurrency exchange Binance, said only 3% of the company’s users left the exchange after know your customer (KYC) processes were made mandatory, Cointelegraph reported Wednesday (Nov. 17).
Binance moved to take compliance seriously and implemented its own KYC requirements for all users Aug. 20, according to the report.
“[F]or Binance, we have chosen to go with full compliance, full mandatory KYC for global users, for every feature,” Zhao told Bloomberg in a Tuesday (Nov. 16) report. “We feel that being compliant will allow more users to use us. Most people do feel more comfortable using a licensed exchange.”
This week, the company handed down a list of fundamental rights in hopes that regulators will look to it as guidance when formulating wider frameworks for the global marketplace.
Read more: Binance Intros Rights for Crypto Users as it Urges Global Guidance
KYC is a standard for financial institutions and major crypto exchanges to ensure they comply with regulations and laws, according to a Binance blog post. KYC is meant to prevent fraud and recognize suspicious behavior as early as possible.
“Without KYC verification, a cryptocurrency exchange may be held liable when a user gets away with committing a crime because they failed to do due diligence,” the post stated.
New customers are typically required to provide identity verification documents before they can open an account, according to the post. KYC procedures are part of the wider scope of a financial institution’s anti-money laundering (AML) rules.
See also: Binance Crypto Exchange Is Banned From Regulated Activity
In the past, Binance pointed to its decentralized, no-physical-headquarters as a benefit, but Zhao said in July that the exchange is eager to collaborate with local regulators to be “licensed everywhere” and become a “financial institution,” Cointelegraph reported.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More