Why is KYC mandatory in CEX?

[GreatArkansas]

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.

Yep, there are still some of them I believe but these exchanges are fishy, because these days, most popular or reputable centralized exchanges already need to undergo KYC, and it's rare to see some that don't have it. Because for sure most of these exchanges are embracing this centralized thing, just to avoid such scammers or criminal activities.

[Minecache]

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.

I don't think the KYC requirement is for customer protection. To put it bluntly, centralized exchanges are protecting themselves because without complying with government regulations, they will not be able to maintain their business, and KYC is one of the regulations from the government. Furthermore, requiring users to KYC is because they are afraid of fraud, money laundering...this will harm them, not customers.
Everything they do is for their own benefit, so don't be surprised when they go bankrupt, they don't have any responsibility to us.

[legendbtc]

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.

When talking about our personal data or identity, I believe no one can hide it because we are all using bank accounts, employee cards and health insurance cards, even social networks and all the centralized services we use every day. Our identities are no longer a secret, why do we go easy on those things but when it comes to CEX we feel uncomfortable. That's the question I've been wondering for a long time.

Furthermore, CEX is a place to exchange, buy, sell, and convert, not a place to store assets. Even banks cannot give us safety, there is no reason to trust CEX. It's our fault, when we lose money we shouldn't blame CEX.

[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.

When talking about our personal data or identity, I believe no one can hide it because we are all using bank accounts, employee cards and health insurance cards, even social networks and all the centralized services we use every day. Our identities are no longer a secret, why do we go easy on those things but when it comes to CEX we feel uncomfortable. That's the question I've been wondering for a long time.

Furthermore, CEX is a place to exchange, buy, sell, and convert, not a place to store assets. Even banks cannot give us safety, there is no reason to trust CEX. It's our fault, when we lose money we shouldn't blame CEX.

Our personal data is both "out there" and "with us". It's interesting that we disclose our information to banks, companies, and social networking sites but not CEXs. It's unclear if cryptocurrencies aren't clear or if people are just cautious of new things. Remember to use CEXs carefully, just like we do when exchanging personal information on other platforms. CEXs aren't the evil guys when things go wrong. The painful lesson we all must learn is that we are responsible for our choices and their consequences. We can make sensible decisions by understanding blockchain technology and storing our crypto assets carefully.

[bayu7adi]

When talking about our personal data or identity, I believe no one can hide it because we are all using bank accounts, employee cards and health insurance cards, even social networks and all the centralized services we use every day. Our identities are no longer a secret, why do we go easy on those things but when it comes to CEX we feel uncomfortable. That's the question I've been wondering for a long time.

Furthermore, CEX is a place to exchange, buy, sell, and convert, not a place to store assets. Even banks cannot give us safety, there is no reason to trust CEX. It's our fault, when we lose money we shouldn't blame CEX.

I concur, as for certain renowned international CEXs, it can sometimes be challenging to report adverse incidents. However, if we carefully select our preferred CEX, such as opting for a local one, there may still be a possibility to report any detrimental occurrences to the relevant authorities.

What I've been doing all along is exclusively utilizing CEXs with impeccable reputations and the highest transaction volumes. Additionally, I turn to local CEXs for exchanging with FIAT currencies. I don't find it burdensome to undergo KYC procedures on both of these platforms since I require them for conducting transactions there.

As for some other centralized exchanges, I skip the KYC verification process and adhere to the transaction limits they've established.

[Synchronice]

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?

If business didn't have regulations, they would definitely not ask you for KYC documents, wouldn't really care about the source of your money or probably would seize your account anytime. You use cryptocurrency for your privacy but once you make yourself in touch with centralized system, you are vanishing that privacy. Centralized systems 99% times don't care about your privacy because that's your problem, not theirs and to be honest, majority of people don't care about privacy too much if the service they get fulfills their needs.

[Z-tight]

It's interesting that we disclose our information to banks, companies, and social networking sites but not CEXs.

I hear a lot of people say this, but it is because centralized exchanges are provably very bad at storing their customers' information safely, they are regularly victims of hacks and data breaches, so the chances are high that the information you give to a centralized exchange could be sold in the black market someday.

Another reason i consider important is that i use a bank and i know they are centralized and must request for my personal information, but my reason of using BTC is because i want to hide some of my financial activities and use a currency that is censorship resistant, if i use centralized exchanges it defeats what i want to achieve and it is the same as me using my centralized bank for 100% of my financial activities.

[GiftedMAN]

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?

If business didn't have regulations, they would definitely not ask you for KYC documents, wouldn't really care about the source of your money or probably would seize your account anytime. You use cryptocurrency for your privacy but once you make yourself in touch with centralized system, you are vanishing that privacy. Centralized systems 99% times don't care about your privacy because that's your problem, not theirs and to be honest, majority of people don't care about privacy too much if the service they get fulfills their needs.

Not all cex exchanges that do ask for KYC and these is mostly need to regulated exchanges to help curb money laundry and other illegal practice by scammers and hackers. The KYC helps to know who is who and reduce the art of scam attempt by individual customers. Many people that have been in the market for long now don't like a cex exchange that ask for KYC because they know what it means and the effect of giving there credentials to exchange and the data is misused or get to the hands of hackers. People still prefer to use p2p to sell there tokens that going to give there information to illegal exchanges.

[alastantiger]

Exchanges require KYC in order to stop fraud like stealing other people's bitcoins and cashing them out, money laundering, scams, hacks, and so on. Most countries require an exchange to have specific KYC measures because they are legally allowed to operate there.

Although I will say that requiring KYC for very small transactions is a bit of a stretch, as it's not really possible to do much with it in the first place.

Alot of people use CEX . Without KYC Cryptocurrencies particularly Bitcoin would be labeled a scam, a dubious scheme because the morally bankrupt people in the society who find the easiest avenue to rip people out of their hard earned money would have scammed alot of people through one fraudulent scheme or another using the CEX platform and there would be no means to identify or catch them. KYC discourages this

[legendbtc]

It's interesting that we disclose our information to banks, companies, and social networking sites but not CEXs.

I hear a lot of people say this, but it is because centralized exchanges are provably very bad at storing their customers' information safely, they are regularly victims of hacks and data breaches, so the chances are high that the information you give to a centralized exchange could be sold in the black market someday.

Another reason i consider important is that i use a bank and i know they are centralized and must request for my personal information, but my reason of using BTC is because i want to hide some of my financial activities and use a currency that is censorship resistant, if i use centralized exchanges it defeats what i want to achieve and it is the same as me using my centralized bank for 100% of my financial activities.

If it comes to disclosing or selling customer information, you should think about social networks and credit lending institutions. They not only fully exploit your personal information, but also sell your information to partners and third parties for profit. Do you think they create a social network and provide it so you can use it for free without any requirements? If it were you, you would be kind enough to spend billions of dollars to create a social network for everyone to use for free?

Yes, if you use bitcoin to hide your assets from everyone, I completely agree and like I said, exchanges are not the place for us to store bitcoin. It's just a place to exchange, buy and sell...No one said we should use exchanges to store our bitcoins.

[Hanadawa]

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 think KYC is an important thing. Cryptocurrencies have many challenges related to government regulation. Therefore, having KYC will make it easier for the CEX exchange to carry out transactions and trades. Your idea that KYC is only for those who make a lot of transactions is a good idea.

However, it will be quite difficult to implement this because there could be loopholes that will be exploited by those who don't want KYC. Or it can also be used to create scam because without KYC, people can create whatever accounts they want. And this could be a problem for CEX in the future.

[DanWalker]

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?

If business didn't have regulations, they would definitely not ask you for KYC documents, wouldn't really care about the source of your money or probably would seize your account anytime. You use cryptocurrency for your privacy but once you make yourself in touch with centralized system, you are vanishing that privacy. Centralized systems 99% times don't care about your privacy because that's your problem, not theirs and to be honest, majority of people don't care about privacy too much if the service they get fulfills their needs.

Not all cex exchanges that do ask for KYC and these is mostly need to regulated exchanges to help curb money laundry and other illegal practice by scammers and hackers. The KYC helps to know who is who and reduce the art of scam attempt by individual customers. Many people that have been in the market for long now don't like a cex exchange that ask for KYC because they know what it means and the effect of giving there credentials to exchange and the data is misused or get to the hands of hackers. People still prefer to use p2p to sell there tokens that going to give there information to illegal exchanges.

Both CEX and DEX have pros and cons. While KYC helps CEX control and manage illegal activities, but KYC will also reveal user information and many people do not like this. Meanwhile, DEX does not require KYC and that is also a loophole that criminals will take advantage of to commit illegal acts. So it is difficult to say whether CEX is better or DEX is better. DEX users will criticize CEX and vice versa, just like cryptocurrency investors always criticize other investments like real estate or stocks. In my opinion, depending on each person's taste, there is a suitable choice, I will not say which one is better than the other.

[Cookdata]

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 think KYC is an important thing. Cryptocurrencies have many challenges related to government regulation. Therefore, having KYC will make it easier for the CEX exchange to carry out transactions and trades. Your idea that KYC is only for those who make a lot of transactions is a good idea.

However, it will be quite difficult to implement this because there could be loopholes that will be exploited by those who don't want KYC. Or it can also be used to create scam because without KYC, people can create whatever accounts they want. And this could be a problem for CEX in the future.

Can you name one thing KYC has done for crypto since the government started the implementation? How many times has cex defaulted and announced being bankrupt due to hacks and stolen funds, even yesterday there was hacked that took place in one of the crypto exchanges called cryptoEX and it was reported that about $27M worth of ETH was stolen, who is the government supposed to KYC? The exchanges that are losing custody of user's funds to hack or the users that are just there to exchange? HUH!

KYC has been useful for the exchange to identify user's identity but I don't think it has been really useful the way it was intended, the centralized exchanges are the ones the government should be wary of, they have done more damage in crypto than even the said individuals. Look at how messy FTX has become till today, they are fighting each other within the teams, the sponsors, the politicians that accepted free donations, the lawyers and the venture capitalist and you think KYC is the problem, common bro.

[Smack That Ace]

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 think KYC is an important thing. Cryptocurrencies have many challenges related to government regulation. Therefore, having KYC will make it easier for the CEX exchange to carry out transactions and trades. Your idea that KYC is only for those who make a lot of transactions is a good idea.

However, it will be quite difficult to implement this because there could be loopholes that will be exploited by those who don't want KYC. Or it can also be used to create scam because without KYC, people can create whatever accounts they want. And this could be a problem for CEX in the future.

Can you name one thing KYC has done for crypto since the government started the implementation? How many times has cex defaulted and announced being bankrupt due to hacks and stolen funds, even yesterday there was hacked that took place in one of the crypto exchanges called cryptoEX and it was reported that about $27M worth of ETH was stolen, who is the government supposed to KYC? The exchanges that are losing custody of user's funds to hack or the users that are just there to exchange? HUH!

KYC has been useful for the exchange to identify user's identity but I don't think it has been really useful the way it was intended, the centralized exchanges are the ones the government should be wary of, they have done more damage in crypto than even the said individuals. Look at how messy FTX has become till today, they are fighting each other within the teams, the sponsors, the politicians that accepted free donations, the lawyers and the venture capitalist and you think KYC is the problem, common bro.

I think KYC helps exchanges to control and track their users to avoid cases of scam or money laundering...The exchange collapse issue has nothing to do with KYC. The collapse of exchanges has legal implications and the government must be held responsible. But another thing is that we don't want to be controlled by the government, we want to be free, but when we are scammed, we ask the government to solve it. This is one of the loopholes in the crypot market and scammers are fully exploiting it.

[mv1986]

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 think KYC is an important thing. Cryptocurrencies have many challenges related to government regulation. Therefore, having KYC will make it easier for the CEX exchange to carry out transactions and trades. Your idea that KYC is only for those who make a lot of transactions is a good idea.

However, it will be quite difficult to implement this because there could be loopholes that will be exploited by those who don't want KYC. Or it can also be used to create scam because without KYC, people can create whatever accounts they want. And this could be a problem for CEX in the future.

Can you name one thing KYC has done for crypto since the government started the implementation? How many times has cex defaulted and announced being bankrupt due to hacks and stolen funds, even yesterday there was hacked that took place in one of the crypto exchanges called cryptoEX and it was reported that about $27M worth of ETH was stolen, who is the government supposed to KYC? The exchanges that are losing custody of user's funds to hack or the users that are just there to exchange? HUH!

KYC has been useful for the exchange to identify user's identity but I don't think it has been really useful the way it was intended, the centralized exchanges are the ones the government should be wary of, they have done more damage in crypto than even the said individuals. Look at how messy FTX has become till today, they are fighting each other within the teams, the sponsors, the politicians that accepted free donations, the lawyers and the venture capitalist and you think KYC is the problem, common bro.

I guess that centralized exchanges are just not as good as banks are at disguising the activities that are going on behind the scenes. FTX is a great example for that. Financing political campaigns on that level is insane. The dude with his curly hair and the jogging pants makes contributions in excess of $100 million to politicians. Then it turns out he ran some of the accounting for a multi-billion dollars company with spreadsheets and I think it was a free accounting software or something.

Banks are running their own scams, but I think they know better how to do it then a young dude like SBF.

KYC at most exchanges is definitely a scam. I think when you take a publicly listed company like Coinbase, there is at least some oversight from regulatory bodies to make sure that they have a certain level of data security in place. But I have been asked by exchanges for my data that couldn't even spell the KYC shortage right. One time a customer support agent wrote it as words to me like "K Why see" or something like that. It was absurd. It's a few years ago and I wanted to trade one specific coin that at the time was only listed there. Better not trade the coin in the first place I guess. At some point they closed my account and I lost a few hundred dollars.

[Maslate]

I think KYC helps exchanges to control and track their users to avoid cases of scam or money laundering...The exchange collapse issue has nothing to do with KYC. The collapse of exchanges has legal implications and the government must be held responsible. But another thing is that we don't want to be controlled by the government, we want to be free, but when we are scammed, we ask the government to solve it. This is one of the loopholes in the crypot market and scammers are fully exploiting it.

The only way users can scam an exchange is if they can hack it, aside from that I don't see any possibility. KYC is just a simple verification process where an exchange would like to know their users and it's mandatory to all legal exchange as they are regulated by a certain agency of the government, so there's no need to question that because exchanges nowadays are like banks.

If we are expecting full anonymity, then there's always this decentralized exchange, but the problem is they don't have the volume like CEX, and that only tells us that more people trust centralized exchange over decentralized exchange which we can conclude that most of them do comply with the KYC.

[Blitzboy]

I think KYC helps exchanges to control and track their users to avoid cases of scam or money laundering...The exchange collapse issue has nothing to do with KYC. The collapse of exchanges has legal implications and the government must be held responsible. But another thing is that we don't want to be controlled by the government, we want to be free, but when we are scammed, we ask the government to solve it. This is one of the loopholes in the crypot market and scammers are fully exploiting it.

The only way users can scam an exchange is if they can hack it, aside from that I don't see any possibility. KYC is just a simple verification process where an exchange would like to know their users and it's mandatory to all legal exchange as they are regulated by a certain agency of the government, so there's no need to question that because exchanges nowadays are like banks.

If we are expecting full anonymity, then there's always this decentralized exchange, but the problem is they don't have the volume like CEX, and that only tells us that more people trust centralized exchange over decentralized exchange which we can conclude that most of them do comply with the KYC.

KYC is essential to this progress. It reassures markets and regulators that fraud will decrease. KYC may deter bad behaviour, but no system is immune to hacking.

DEX may not have as much traffic as centralised exchanges, but they offer something special. You can encounter people who prioritise independence and decentralisation over speed and money there. CEX have the most users, however DEXs are gaining popularity. As more individuals learn about blockchain technologies, DEXs may gain users.

[CarnagexD]

I think KYC helps exchanges to control and track their users to avoid cases of scam or money laundering...The exchange collapse issue has nothing to do with KYC. The collapse of exchanges has legal implications and the government must be held responsible. But another thing is that we don't want to be controlled by the government, we want to be free, but when we are scammed, we ask the government to solve it. This is one of the loopholes in the crypot market and scammers are fully exploiting it.

The only way users can scam an exchange is if they can hack it, aside from that I don't see any possibility. KYC is just a simple verification process where an exchange would like to know their users and it's mandatory to all legal exchange as they are regulated by a certain agency of the government, so there's no need to question that because exchanges nowadays are like banks.

If we are expecting full anonymity, then there's always this decentralized exchange, but the problem is they don't have the volume like CEX, and that only tells us that more people trust centralized exchange over decentralized exchange which we can conclude that most of them do comply with the KYC.

You don't need to avoid Know Your Customer (KYCs). It is intended to protect you and the gambling company. Unless you are going to do something illegal well of course you have to fear it. But these procedures are a standard requirement for most legitimate cryptocurrency exchanges. These procedures are mandated by regulatory agencies to ensure that exchanges can verify the identities of their users. By doing so, exchanges can comply with legal frameworks aimed at preventing illegal activities like money laundering and fraud.

[Smack That Ace]

I think KYC helps exchanges to control and track their users to avoid cases of scam or money laundering...The exchange collapse issue has nothing to do with KYC. The collapse of exchanges has legal implications and the government must be held responsible. But another thing is that we don't want to be controlled by the government, we want to be free, but when we are scammed, we ask the government to solve it. This is one of the loopholes in the crypot market and scammers are fully exploiting it.

The only way users can scam an exchange is if they can hack it, aside from that I don't see any possibility. KYC is just a simple verification process where an exchange would like to know their users and it's mandatory to all legal exchange as they are regulated by a certain agency of the government, so there's no need to question that because exchanges nowadays are like banks.

If we are expecting full anonymity, then there's always this decentralized exchange, but the problem is they don't have the volume like CEX, and that only tells us that more people trust centralized exchange over decentralized exchange which we can conclude that most of them do comply with the KYC.

KYC is essential to this progress. It reassures markets and regulators that fraud will decrease. KYC may deter bad behaviour, but no system is immune to hacking.

DEX may not have as much traffic as centralised exchanges, but they offer something special. You can encounter people who prioritise independence and decentralisation over speed and money there. CEX have the most users, however DEXs are gaining popularity. As more individuals learn about blockchain technologies, DEXs may gain users.

If evaluated fairly, DEX is not a new technology on the market, it has appeared and existed for quite a long time but because of some limitations, it still cannot compete with CEX. CEX really brings more utilities and services that we need and almost people cannot give up CEX even though they know that there are many risks when using it.

DEX has its advantages and especially emphasizes privacy, but it cannot be denied that the liquidity of DEX is really too small compared to CEX. Frankly, I also do not believe that the game will become fairer, CEX will still prevail whether we believe it or not.

[BVeyron]

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?

KYC is the main tool, which is used by crypto enterprises to avoid court issues. First group of court issues are problems of the enterprise itself: accusations of tax evasion, money laundering etc. Since all the cryptocurrencies are anonymous, it's really hard to prove innocent without bunches of KYC data. Second group of cases are person vs person cases, in which the enterprise is a platform for money exchange. In such cases if all the transactions are deanonymised and registered, it might make clear who tells the truth who lies and what really happened. If such transaction registries are not made, then the enterprise itself can easily become te next victim of this court case.