Why_You_Need_KYC_for_Crypto_Exchange_Registration

in #buyusdt • 4 months ago

User Concerns About KYC in Crypto Exchanges

Numerous users experience frustration upon discovering that identity verification is mandatory when signing up for a cryptocurrency exchange. I shared this sentiment—I was reluctant to share personal information with the platform and particularly opposed to facial recognition. Isn't cryptocurrency designed to be untraceable? Why is identity verification necessary to purchase crypto on an exchange? Moreover, if I withdraw crypto from a verified account, doesn't that make me traceable?

I've also encountered instances involving ransomware where hackers publicized their Bitcoin wallets to evade tracking.

Consequently, I question: If I undergo KYC on an exchange and trade Bitcoin, is my personal information compromised? I'm required to link my phone number, identification document, and even a Google email. Could the platform sell my identity? These are common concerns among users. We are skeptical about the necessity of this data collection and fear it might be sold after acquisition. So, what actions can we take?

Why Do Crypto Exchanges Require KYC?

This article elucidates the reasons behind cryptocurrency platforms' identity verification requirements. Do they sell your information post-KYC? We'll commence with real-world illustrations.

HSBC and Standard Chartered incurred multi-billion dollar fines due to inadequate anti-money laundering (AML) measures. HSBC was penalized $1.9 billion for facilitating money laundering by drug cartels from Mexico and Colombia. Additionally, the bank allegedly provided services to terrorist organizations and permitted North Korea and Iran—both subject to international sanctions—to open accounts and conduct transactions.

Standard Chartered was fined $132 million by UK regulators for failing to enforce sufficient AML protocols, enabling criminal groups to launder up to $265 billion.

In conventional finance, AML and KYC are indispensable. Operating a bank while neglecting AML responsibilities invites substantial regulatory fines. This is inherent to the system: to profit in this domain, one must embrace the associated obligations.

As exchanges now bridge the cryptocurrency and fiat worlds, criminal entities, drug cartels, and money launderers may exploit these platforms. Consequently, exchanges must adhere to AML regulations.

From the exchange's viewpoint, omitting phone verification or KYC could leave them unable to identify perpetrators in the event of illegal activities, exposing them to legal liabilities and penalties. Funds derived from gambling or illicit activities are akin to a contagion—exchanges strive to avoid association. Hence, platforms mandate KYC for all users.

Will Crypto Exchanges Leak Your Identity?

In brief: no, exchanges generally do not intentionally leak your data. Why? Because such actions would severely harm their operations.

Cryptocurrency exchanges operate on trust. Without user trust, trading activity diminishes. Platforms aspire to establish enduring, reputable brands. Consider this instance:

Upbit, South Korea's largest exchange, faced investigation for neglecting to verify the identities of 500,000 to 600,000 accounts. Subsequently, public and regulatory confidence significantly eroded.

From a commercial perspective, no exchange desires to compromise user data. A single incident could devastate their reputation and cause user attrition. Nevertheless, this does not preclude third parties from attempting to pilfer your information.

  1. Your mobile service provider may access SMS communications. Binding your phone number to an exchange could allow them to monitor texts, identify the platform you use, and potentially sell your number.
  2. Free VPN services frequently contain concealed vulnerabilities. Utilizing one might enable monitoring of all device traffic and sale of your data—including exchanges-related communications.

Therefore, safeguarding online security is paramount for cryptocurrency users. This underscores why leading platforms enforce identity verification and pursue regulatory compliance.

For example:

  • OKX secured the inaugural license in Dubai and also obtained licensing in Singapore.
  • Binance acquired a license in Dubai.
  • Bitget invested in OSL Group, which possesses a license in Hong Kong.
  • Bybit attained licenses in Dubai and the Netherlands.

These exchanges are progressing toward comprehensive compliance. Contrasted with inexpensive U.S. MSB licenses (costing approximately $20,000 and readily purchasable), these represent authentic regulatory licenses demanding full legal adherence and due diligence.

If you haven’t registered for OKX or Binance yet, now’s an opportune moment:

1. OKX or Backup Link

  • Asset size: $17.1 billion (up slightly from 2024, reflecting market growth)
  • Trading pairs: 620 (25 new additions including trending tokens)
  • 24h volume: $16.05 billion (boosted by global user growth)
  • Highlight: Operated by OKEX Technology Co., OKX received early investment from Tim Draper, legendary VC behind Hotmail, Baidu, and Tesla. In 2025, OKX remains a top global exchange, especially dominant in Asia.

2. Binance

  • Asset size: $12.85 billion (growing steadily)
  • Trading pairs: 780 (38 new pairs, keeping pace with market trends)
  • 24h volume: $19.025 billion (new record highs)
  • Highlight: Founded by CZ (Changpeng Zhao), Binance remains the dominant crypto exchange in 2025 with over 150 million users. Despite regulatory challenges, Binance’s top-tier tech and UX keep it ahead. Chinese users can register via email and access with a VPN.

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