Why is KYC mandatory in CEX?

[panganib999]

KYC is important in centralized exchanges as they use it for profiling. They require customer information for some sort of data-correlation so they can use it for 2-factor authentication or something, and in some cases they require it to make sure that customers for withdrawals to make sure that they don't money launder. There are other more viable options that wouldn't really jeopardize the customer's identity on the line like Static IP addresses fetching to make sure that they aren't creating multiple accounts, but since these are easier to implement, and since it's a little counterintuitive to not ask for customer's information when you're already working with a centralized exchange, they might as well.

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[nakamura12]

Indeed, that is the reason why CEX has KYC. Also, some of them can have a p2p wherein you can convert your crypto to your local currency via bank or any digital wallet that is also registered to the government. Actually, I am more into CEX than DEX, for me it is more safer and also some projects cannot list their token in cex without any docs and enough money to pay especially to tier 1 exchanges.

The reason is obvious as to why they require cex to ask their customers KYC which is to avoid illegal activities like money laundering. If they aren't under the government then they wouldn't have to ask KYC from their customers just like dex. That's why many people are more into dex than cex just like me which I prefer dex than cex. There are risk when you use cex like your info might get leaked or sold by the platform to other people and that will result in identity theft which you wouldn't want.

[Ojima-ojo]

KYC is important in centralized exchanges as they use it for profiling. They require customer information for some sort of data-correlation so they can use it for 2-factor authentication or something, and in some cases they require it to make sure that customers for withdrawals to make sure that they don't money launder. Other more viable options wouldn't really jeopardize the customer's identity on the line like Static IP addresses fetching to make sure that they aren't creating multiple accounts, but since these are easier to implement, and since it's a little counterintuitive to not ask for customer's information when you're already working with a centralized exchange, they might as well.

There is no cex without KYC and the reason for licensing,  so to fulfil the regulatory mandate, the exchange must have to demand for customers' data and other vital information, but what has baffled me for some time now is that, despite all the KYC that have come along centralized exchanges still failed to protect the customers.


Take the FTX issue for example, despite being a regulatory compliance exchange with customer mandatory KYC, its bankruptcy crisis still fell on the customers who lost a huge sum of money running into millions or billions of dollars, so if the regulator had an interest in the customers at heart while issuing a license to cex, there should be some form of insurance of the customers and collecting KYC should be in that regard of settling potential crises such as this, to protect the exchange users from losing funds.

[n00ber]

Indeed, that is the reason why CEX has KYC. Also, some of them can have a p2p wherein you can convert your crypto to your local currency via bank or any digital wallet that is also registered to the government. Actually, I am more into CEX than DEX, for me it is more safer and also some projects cannot list their token in cex without any docs and enough money to pay especially to tier 1 exchanges.

The reason is obvious as to why they require cex to ask their customers KYC which is to avoid illegal activities like money laundering. If they aren't under the government then they wouldn't have to ask KYC from their customers just like dex. That's why many people are more into dex than cex just like me which I prefer dex than cex. There are risk when you use cex like your info might get leaked or sold by the platform to other people and that will result in identity theft which you wouldn't want.

Besides not having to provide identity, I don't think DEX has anything superior to CEX. DEX liquidity is still very low so we will encounter many difficulties. I tried p2p trading on bisq and it took more than 1 day to contact the seller which is quite annoying if we need the money urgently. Moreover, if you are a day trader, DEX is not a wise choice as they do not offer too many trading pairs and features that cannot be compared with CEX. DEX is great for privacy, the rest are still not comparable to CEX.

[Ale88]

Besides not having to provide identity, I don't think DEX has anything superior to CEX. DEX liquidity is still very low so we will encounter many difficulties. I tried p2p trading on bisq and it took more than 1 day to contact the seller which is quite annoying if we need the money urgently. Moreover, if you are a day trader, DEX is not a wise choice as they do not offer too many trading pairs and features that cannot be compared with CEX. DEX is great for privacy, the rest are still not comparable to CEX.

DEXs are the future, even CZ said that in the next years, when cryptos will become more mainstream, people will have more knowledge about their use and DEXs will increase a lot in popularity. Right now too many users don't feel comfortable using them, and I understand it, it's like internet at the very beginning, just few people would use it, all the other would still rely on newspapers, television, radio, etc.

[Iranus]

Besides not having to provide identity, I don't think DEX has anything superior to CEX. DEX liquidity is still very low so we will encounter many difficulties. I tried p2p trading on bisq and it took more than 1 day to contact the seller which is quite annoying if we need the money urgently. Moreover, if you are a day trader, DEX is not a wise choice as they do not offer too many trading pairs and features that cannot be compared with CEX. DEX is great for privacy, the rest are still not comparable to CEX.

DEXs are the future, even CZ said that in the next years, when cryptos will become more mainstream, people will have more knowledge about their use and DEXs will increase a lot in popularity. Right now too many users don't feel comfortable using them, and I understand it, it's like internet at the very beginning, just few people would use it, all the other would still rely on newspapers, television, radio, etc.

I also believe that DEX will soon have improvements and developments in the future because the demand for them is increasing. But my question is when will cryptocurrencies become more widely available and governments will introduce more regulations. Can DEXs exist if they do not comply with the law? Just as mixers are constantly targeted by the government for not complying with government regulations. Or highly anonymous currencies like Dash and XMR...have all become government targets, and they also want to eliminate them. Honestly, it is difficult to predict the future of DEXs.

[legendbtc]

Besides not having to provide identity, I don't think DEX has anything superior to CEX. DEX liquidity is still very low so we will encounter many difficulties. I tried p2p trading on bisq and it took more than 1 day to contact the seller which is quite annoying if we need the money urgently. Moreover, if you are a day trader, DEX is not a wise choice as they do not offer too many trading pairs and features that cannot be compared with CEX. DEX is great for privacy, the rest are still not comparable to CEX.

DEXs are the future, even CZ said that in the next years, when cryptos will become more mainstream, people will have more knowledge about their use and DEXs will increase a lot in popularity. Right now too many users don't feel comfortable using them, and I understand it, it's like internet at the very beginning, just few people would use it, all the other would still rely on newspapers, television, radio, etc.

DEX is not new, it has been around for a long time but for some reason until now it is still not more perfect and cannot compete on equal terms with CEX. DEX still seems to be slower and weaker than CEX in the battle for market share. I have also heard many people believe that DEX will be the future of exchanges, but so far CEX is still the place that people trust more even when there are many incidents and bankruptcies.

I don't want to disappoint you, but I seriously doubt that DEX will not be the future and surpass CEX. Since FTX collapsed and recently there was also bad news about bybit but then people turned to OKX instead of looking to decentralized exchanges like we thought.

[adzino]

KYC is a must in Centralized Exchanges primarily due to regulatory laws. Governments want to prevent money laundering and other illegal activities (and also track and see what people are doing with their money). So, for a CEX to operate legally in many countries, they're required to ask for KYC from their users. It's not just about legal laws, it's also for the safety of the exchange and its users. Without KYC, the exchange might be charged and convicted of helping in money laundering. And if people do P2P trades, there is a risk that the user might be receiving money that has been obtained from illegal source. The user might accidently become a part of a larger crime.

[tech30338]

around 2016 KYC is not mandatory, you can signup on exchange without those only email confirmation, but as time goes, once the government became aware of the money being transfer via crypto currency to launder, they require the exchange for the mandatory KYC so that if they need anything they would ask the exchange, today there is no way you can pull out the money without them being known who you are, in you process this through exchange,
the bad thing also for those who have money in cex is if they don't KYC their account will be suspended or worse be ban and lost the money.

[NNRR]

KYC is not mandatory in all CEX exchanges, but in big exchanges, no one can withdraw any funds without KYC, maybe the main purpose of the exchanges is Money Laundering, Scam, or Scam, so the exchanges have made KYC mandatory. It is my opinion that every major CEX exchange should make KYC mandatory It may be beneficial that no scammer can scam anyone

[Strongkored]

DEX is not new, it has been around for a long time but for some reason until now it is still not more perfect and cannot compete on equal terms with CEX. DEX still seems to be slower and weaker than CEX in the battle for market share. I have also heard many people believe that DEX will be the future of exchanges, but so far CEX is still the place that people trust more even when there are many incidents and bankruptcies.

I don't want to disappoint you, but I seriously doubt that DEX will not be the future and surpass CEX. Since FTX collapsed and recently there was also bad news about bybit but then people turned to OKX instead of looking to decentralized exchanges like we thought.

It was only about time before DEX finally started to become a mainstream choice, Why? because nowadays more people don't realize how important it is to keep our personal data confidential, and also using DEX will keep our assets safe from freezing from exchanges like CEX often do, and when users ask about the cause they will never get an answer that is convincing.

It's quite strange that the many hacking dramas from CEX, bankruptcy, scams and so on haven't been able to make people massively abandon CEX and start using DEX because people will prefer the convenience they get in CEX while DEX looks more complicated like Bisq you have to download it to use it, but if there was a simple DEX I'm sure it would start to change people's perspective and start switching to something safer.

[posi]

KYC is a must in Centralized Exchanges primarily due to regulatory laws. Governments want to prevent money laundering and other illegal activities (and also track and see what people are doing with their money). So, for a CEX to operate legally in many countries, they're required to ask for KYC from their users. It's not just about legal laws, it's also for the safety of the exchange and its users. Without KYC, the exchange might be charged and convicted of helping in money laundering. And if people do P2P trades, there is a risk that the user might be receiving money that has been obtained from illegal source. The user might accidently become a part of a larger crime.

In general, KYC is not necessarily bad because by doing so we will be protected by law. Many people do not like revealing their identities so they feel uncomfortable with CEX when it requires KYC, but those who do not like KYC and think that they do not need legal protection, but when attacked or stolen, the first person they looking for is still the police and the law, LOL.

Personally, I don't hate CEX and I still use them because they offer many services that are not available on DEX. I also believe that CEX is here to stay and remains the top choice for investors over DEX. Whether we like it or not, that's what's happening.

[Blitzboy]

DEX is not new, it has been around for a long time but for some reason until now it is still not more perfect and cannot compete on equal terms with CEX. DEX still seems to be slower and weaker than CEX in the battle for market share. I have also heard many people believe that DEX will be the future of exchanges, but so far CEX is still the place that people trust more even when there are many incidents and bankruptcies.

I don't want to disappoint you, but I seriously doubt that DEX will not be the future and surpass CEX. Since FTX collapsed and recently there was also bad news about bybit but then people turned to OKX instead of looking to decentralized exchanges like we thought.

It was only about time before DEX finally started to become a mainstream choice, Why? because nowadays more people don't realize how important it is to keep our personal data confidential, and also using DEX will keep our assets safe from freezing from exchanges like CEX often do, and when users ask about the cause they will never get an answer that is convincing.

It's quite strange that the many hacking dramas from CEX, bankruptcy, scams and so on haven't been able to make people massively abandon CEX and start using DEX because people will prefer the convenience they get in CEX while DEX looks more complicated like Bisq you have to download it to use it, but if there was a simple DEX I'm sure it would start to change people's perspective and start switching to something safer.

Concerns about data privacy and security are reasonable, especially with cyber dangers rising. Centralized exchanges (CEX) sometimes mishandle users' assets and data, and the lack of transparency when things go wrong just fuels the suspicion.

However, CEX is convenient, especially for newbies. Many people got into crypto because of their user interfaces, speed, and services. The simplicity of CEX has won over.

Although superior in data confidentiality and asset security, DEX has a learning curve. Downloading platforms like Bisq can be scary. However, DEX platforms may be able to simplify their interfaces as technology advances, combining DEX's security with CEX's user-friendliness. If that happens, it might transform the crypto industry by making it safer and more convenient.

[Peanutswar]

Not all platform requiring a KYC some of them just the basic email and phone number and we called this sometimes as level 1 only it's use for the account recovery and other feature, but of course they make a requirements and agreement if the account have a KYC they can experience difference in the local ones. But if you are just a small trader you don't pursue too much in KYC. Just likely a withdrawal amount only.

[fuguebtc]

Not all platform requiring a KYC some of them just the basic email and phone number and we called this sometimes as level 1 only it's use for the account recovery and other feature, but of course they make a requirements and agreement if the account have a KYC they can experience difference in the local ones. But if you are just a small trader you don't pursue too much in KYC. Just likely a withdrawal amount only.

There are many limitations if you use a centralized exchange without KYC. For example, you cannot deposit and withdraw large amounts, you cannot use their P2P feature to convert to fiat currency, or your account may suddenly freeze and you will have to provide documentation ID card to solve the problem. If you really don't like KYC, it's best not to use centralized exchanges in the first place to avoid unnecessary trouble. You should use a decentralized exchange from the beginning.

But as far as I know, most centralized exchanges have started requiring KYC to be able to use even level 1.

[qwertyup23]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

I do think that there are CEX that do not require any KYC but be wary of these exchanges as you should not keep your BTCs longer on them.

Most of the exchanges have KYC in order for the platform to provide security for both of the parties. This guarantees the exchange that they have your personal information and no shenanigans can be executed. In effect, exchanges require KYC for both of your security.

While this may be the case, I do recommend that you register in an exchange that do require KYC.

[Wakate]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

Honestly I almost thought bitget was a KYC free exchange until I discovered that you will need to do KYC before you can use the exchange to do anything you want even trading. This is not supposed to be so because I know there are some cex exchanges that don't make KYC compulsory at all except you want to increase the amount you can able to trader and receive funds. You can search the internet for other exchanges that don't make KYC compulsory which you can use in your region without any restrictions or need to use VPN.

[Aanuoluwatofunmi]

KYC is not mandatory in all CEX exchanges, but in big exchanges, no one can withdraw any funds without KYC, maybe the main purpose of the exchanges is Money Laundering, Scam, or Scam, so the exchanges have made KYC mandatory. It is my opinion that every major CEX exchange should make KYC mandatory It may be beneficial that no scammer can scam anyone

Some exchanges may not only require for kyc for a start but along the way they may choose to make such request later and place demands on it because they are unpredictable, why then can't we go ahead to make use of a non custodial wallet instead of using a custodial wallet from exchanges, we can also consider the risk in them as why not to use them together with the privacy abuse in using a centralized exchange.

[mvdheuvel1983]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

For most centralized exchanges, KYC is mandatory for several reasons ranging from keeping the customer from engaging in fraudulent activities with their accounts to ensuring customers credibility. However my qualms with these Centralized exchanges is that they are honest with the customers. Being that our personal information which we submitted to them are not well secured. They may even go as far as selling off these data to a third party for profit.  Our KYC documents is not as private as they have us think it is. And fruads are still being committed.

[Texac]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

Honestly I almost thought bitget was a KYC free exchange until I discovered that you will need to do KYC before you can use the exchange to do anything you want even trading. This is not supposed to be so because I know there are some cex exchanges that don't make KYC compulsory at all except you want to increase the amount you can able to trader and receive funds. You can search the internet for other exchanges that don't make KYC compulsory which you can use in your region without any restrictions or need to use VPN.

There are not too many centralized exchanges that do not require KYC, as far as I know only Kucoin does not require KYC if you only trade small amounts.  for larger amounts, you cannot use them without KYC.  centralized exchanges all comply with the law to operate, so failure to KYC is very unlikely, it is a government regulation and no longer under their jurisdiction.

DEXs are an option for those who do not want to expose their privacy, but they are not as liquid nor as full-featured as CEXs.  so up to now, DEXs are not the choice of many people.