Why is KYC mandatory in CEX?

[Renampun]

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?

afaik, exchanges that previously did not require KYC have now changed to requiring KYC because developers are under considerable pressure from governments in several countries. Moreover, currently Bitget has quite high daily transactions so that in order to survive they have to comply with the government and its regulations, but if you really don't like doing KYC, you should avoid using CEX, just use P2P which doesn't require KYC.

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[DVlog]

I think government want to reduce the use of cryptocurrency for illegal transaction so government want to increase it trace ability. honestly I am okay with KYC as long as they only use it prevent criminal activity. but I am afraid that government do abuse of power by force the citizens to pay tax or pay anything to increase country revenue which they will corrupt it. honestly I think the taxation system in my country is unhealthy and weighing the citizen, in my opinion those people who work in that related institution are too slick. I hope there are more wise, good and honest people who manage my country in the future and replace the bad people. I hope for the better in 2024.

Governments are concerned about illegal activities through cryptocurrencies. And they think that most of this activity is done through cex like Binance. They have a large user base and their P2P system is widely used all over the world. SEC is targeting these exchanges by saying they are involved with these types of activity. So they do not have any other option but to force their user to do KYC. If someone is not doing anything illegal they shouldn't be afraid of it or if someone thinks they should not share their identity then dex or P2P is the best option.

[Quidat]

I think government want to reduce the use of cryptocurrency for illegal transaction so government want to increase it trace ability. honestly I am okay with KYC as long as they only use it prevent criminal activity. but I am afraid that government do abuse of power by force the citizens to pay tax or pay anything to increase country revenue which they will corrupt it. honestly I think the taxation system in my country is unhealthy and weighing the citizen, in my opinion those people who work in that related institution are too slick. I hope there are more wise, good and honest people who manage my country in the future and replace the bad people. I hope for the better in 2024.

Governments are concerned about illegal activities through cryptocurrencies. And they think that most of this activity is done through cex like Binance. They have a large user base and their P2P system is widely used all over the world. SEC is targeting these exchanges by saying they are involved with these types of activity. So they do not have any other option but to force their user to do KYC. If someone is not doing anything illegal they shouldn't be afraid of it or if someone thinks they should not share their identity then dex or P2P is the best option.

Government would really be loving on touching everything and this is why that anything that touches up fiat and other things correlated to it or simply getting in line with fiat and various centralized things
then it would be understandable that they would really be involved into it and there's no escape to that. You could still make use of known CEX platforms that we do have as of today but it would really be entitizing you to have that kind of verification since you cant really make use outmost of its features like p2p or something like that or having restrictions or small limits when it comes to deposit or withdrawal on which it do really sucks if you dont really comply with those simple verifications but its true that you could really still make use of the platform but of course with limited features or usage
on which it would be leading you no choice but to comply and submit those KYC but well you do still have the option on not to and it would really be entirely depending on your needs.

[The Cryptovator]

CEX Means Centralized Exchange which indicates it has been controlled by central authority. So basically all the exchanges operate worldwide and cooperate with legal authorities. Exchange is obliged to provide users data in case any legal authority asks. So they are forcing us to pass KYC by submitting our legal documents. Nowadays it's hard to find exchanges without KYC. Though there were a few exchanges like KuCoin where KYC wasn't mandatory there were withdrawal limits. But day by day all the centralized exchanges requiring pass KYC to use the exchanges.

[yazher]

Another thing is, when it comes to airdrops the owner of that project has some way to prevent duplicates and one of them is to make their participants do KYC in order to prevent them from getting double rewards or sometimes this is their way to not distribute the rewards for others because in the first place, they tricked their participants and they just implemented these rules in the last minutes when they are about to distribute the rewards for airdrops or bounties.

[Silberman]

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?

Those are the ideals behind bitcoin which created this market, but you cannot hope for the governments to abide to them right? Why should they? When what they have pursued for a long time is the complete opposite and they do not want a single transaction to be out of their scrutiny, this is why they are pushing so hard for the disappearance of cash by limiting what you can do with it, and it is also why they are pushing for people to use their CBDCs as this will put them in complete control of your finances.

[Z-tight]

Another thing is, when it comes to airdrops the owner of that project has some way to prevent duplicates and one of them is to make their participants do KYC in order to prevent them from getting double rewards

Too many of these airdrops are scams and they require their participants to submit kyc information to them, which they will later sell to bad actors in the black market for a few dollars. I don't recommend users to give their data to any service, but i can understand if they give this data to centralized exchanges, but for airdrops or faucets, it is a no for me, it is surely not worth it to pass kyc because of worthless stuffs like airdrops or faucets, the risk outweighs the benefits.

[Zee27]

KYC is not entirely a bad implementation but it varies on the various exchanges in the sense that some are quite easy and doesn't require in-depth information on you as a customer so your privacy is still respected. Lol I remember when I had to do KYC on Bybit I felt like they were being too extreme but I knew it was necessary. You asked about Bitget, I think theirs is quite flexible.

[Bananington]

If having the knowledge already that CEX is more controlled that a decentralized exchange, it should be clear that it is mandatory to complete a KYC verification on a CEX before transaction in crypto related services is approved.
No need for anonymity in a CEX, so why should completing a KYC be a problem?

The issue I am bothered about is that of not having enough knowledge on a particular CEX platform before registering or completing a KYC verification. This is when ignorant customers fall prey to scammers and hackers.
It is advised to always complete your KYC verification on a certified CEX platform before engaging their service.

[AmoreJaz]

If having the knowledge already that CEX is more controlled that a decentralized exchange, it should be clear that it is mandatory to complete a KYC verification on a CEX before transaction in crypto related services is approved.
No need for anonymity in a CEX, so why should completing a KYC be a problem?

The issue I am bothered about is that of not having enough knowledge on a particular CEX platform before registering or completing a KYC verification. This is when ignorant customers fall prey to scammers and hackers.
It is advised to always complete your KYC verification on a certified CEX platform before engaging their service.

the answer is actually pretty simple about the question of the OP. these CEXs are requiring their customers to undergo KYC because they are licensed to implement the AML/KYC policy according to the jurisdiction where they are operating their business. doubt the motive of the site if they are not legally registered and yet, they are requiring KYC from their customers. as these crypto-exchanges are mandated by the Central Bank to implement the AML/KYC protocol, they have no choice but require their customers to submit their KYC docs to them.

[Ale88]

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?

It's to every exchange deciding what to do. Of course there are consequences because they can be shut down or fined in case they don't follow the rules of some specific country and yet they offer their services to those citizens. Some exchanges are more relaxed and others prefer to know exactly who is doing what on their exchange. If you don't like them just don't use them, there are plenty of options out there.

[lionheart78]

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?

It is needed since the exchange is complying on government regulations.  One of the implementations in a service where currency is involved is to know the customer.  Since one of the regulations wanted to prevent money laundering, they need the data of every individual in order to track down their financial activities on that platform.  They may even require a higher form of KYC where one have to submit their source of income.

Aside from that it is also one form of account security and to stop others from committing fraud.  Here is an article from Binance stating the need for KYC: THE IMPORTANCE OF KYC IN CENTRALIZED CRYPTO EXCHANGES

[TravelMug]

If having the knowledge already that CEX is more controlled that a decentralized exchange, it should be clear that it is mandatory to complete a KYC verification on a CEX before transaction in crypto related services is approved.
No need for anonymity in a CEX, so why should completing a KYC be a problem?

The issue I am bothered about is that of not having enough knowledge on a particular CEX platform before registering or completing a KYC verification. This is when ignorant customers fall prey to scammers and hackers.
It is advised to always complete your KYC verification on a certified CEX platform before engaging their service.

the answer is actually pretty simple about the question of the OP. these CEXs are requiring their customers to undergo KYC because they are licensed to implement the AML/KYC policy according to the jurisdiction where they are operating their business. doubt the motive of the site if they are not legally registered and yet, they are requiring KYC from their customers. as these crypto-exchanges are mandated by the Central Bank to implement the AML/KYC protocol, they have no choice but require their customers to submit their KYC docs to them.

Yes, they are under regulatory pressures to ask for KYC now, specially after 2017's massive bull run. So they regulation that crypto exchanges will have to follow certain rule if they wanted to operate to let's say in a certain country that has a tight regulation as far as crypto goes.

And so exchanges can't do anything. Unless we go to DEX, but there is a question of liquidity as well. So there is a trade off, used centralized exchange but there is high liquidity but you have to passed KYC, or DEX, but then it's slow and most of the time very slow process.

[Kakmakr]

The moment when an Exchange touch Fiat currencies, it has to adhere to local governments rules and regulations. These regulations were introduced to follow the money trail to trace financial crimes and to monitor and control people's finances.

They use money laundering as an excuse and also other financial crimes, but an added benefit for them is the monitoring of people's financial wealth and also to help them with the collecting of taxes. (The money that are paying their salaries) 

[MusaMohamed]

Yes, they are under regulatory pressures to ask for KYC now, specially after 2017's massive bull run. So they regulation that crypto exchanges will have to follow certain rule if they wanted to operate to let's say in a certain country that has a tight regulation as far as crypto goes.

And so exchanges can't do anything.

They can not do anything is right if government request their exchange to do KYC against customers. However, we don't know exchanges do this because of government request or just borrow it as their reason to do KYC.

Scam exchanges surely borrow this reason but non scam exchanges can do this too. I am fearful how they will store customer data and photos of KYC documents, selfies. Their bad security on data base can leak their customer documents massively.

Unless we go to DEX, but there is a question of liquidity as well. So there is a trade off, used centralized exchange but there is high liquidity but you have to passed KYC, or DEX, but then it's slow and most of the time very slow process.

Decentralized exchanges have another risk. They can be seized or shutdown by governments and this risk is bigger with decentralized exchanges that are targets of governments. They can not govern DEXs well and they go with alternative regulatory solution, seize or shutdown those DEXs.

[fruktik]

Governments are concerned about illegal activities through cryptocurrencies. And they think that most of this activity is done through cex like Binance. They have a large user base and their P2P system is widely used all over the world. SEC is targeting these exchanges by saying they are involved with these types of activity. So they do not have any other option but to force their user to do KYC. If someone is not doing anything illegal they shouldn't be afraid of it or if someone thinks they should not share their identity then dex or P2P is the best option.

I am against the verification of identity on the exchanges. This is a violation of the principles of cryptocurrencies. Why should I do this? In today's world, you should cherish your personal data, and not scatter it. Many cases are already known when they fall into the hands of scammers and very sad consequences come for people. It is better to avoid this in advance.
In addition, I do not often engage in speculative transactions in order to pass an identity check.
There are still those platforms where the principle of anonymity is in the first place, but there are fewer of them every day. Already very strong pressure comes from the financial regulator.

[OrangeII]

CEX is a centralized exchange, so they still have full control over what happens there. to minimize the risk of money laundering, and others, CEX requires KYC. Previously, KYC was not mandatory, and there are still many CEXs that can be used even without performing KYC. However, due to government pressure and legal legality, currently most CEXs require KYC. although there are quite a few who challenge this because it is not in accordance with the rules of anonymous crypto, but like it or not they have to comply with the law.

[Rabata]

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 all users were legit then KYC might not be needed. But that is not possible because there will be some miscreants ‍and for all these reasons KYC has become mandatory. In some countries the issue of KYC mentioned in their regulations. If you want to take any license form the country, it will be mandatory to do KYC. Not just Bitget the most centralized exchanges require KYC. I think all the sites which have not made KYC mandatory yet will gradually make KYC compulsory when the government comes under the restrictions. The ratio of money laundering has increased so much in today's world so if government try to control it then KYC is definitely needed.

[leonair]

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 all users were legit then KYC might not be needed. But that is not possible because there will be some miscreants ‍and for all these reasons KYC has become mandatory. In some countries the issue of KYC mentioned in their regulations. If you want to take any license form the country, it will be mandatory to do KYC. Not just Bitget the most centralized exchanges require KYC. I think all the sites which have not made KYC mandatory yet will gradually make KYC compulsory when the government comes under the restrictions. The ratio of money laundering has increased so much in today's world so if government try to control it then KYC is definitely needed.

One of the reasons for making KYC mandatory is to prevent money laundering. Every country has a law and when a CEX does business globally it can do business in those countries as per the laws of those countries and that's why KYC is being made mandatory gradually. Binance made kyc mandatory long ago. A few days ago Kucoin made kyc mandatory. Still exchanges like MEXC, Gate.io allow trade, deposit, withdraw without kyc but very less amount. In future they may also make kyc mandatory.  So it is better to complete kyc beforehand

[JunaidAzizi]

I am against the verification of identity on the exchanges. This is a violation of the principles of cryptocurrencies. Why should I do this? In today's world, you should cherish your personal data, and not scatter it. Many cases are already known when they fall into the hands of scammers and very sad consequences come for people. It is better to avoid this in advance.
In addition, I do not often engage in speculative transactions in order to pass an identity check.
There are still those platforms where the principle of anonymity is in the first place, but there are fewer of them every day. Already very strong pressure comes from the financial regulator.

Cryptocurrency was originally designed to be a more anonymous way of transacting money but in recent years there are much unlawful activity has been done and the government pressured the exchange to implement the KYC procedure. Verifying your identity with the exchange is beneficial not only for you but also for others. You will be more likely to trade or exchange funds and the person to whom you want to exchange is also identified to that exchange which will lessen the chances of stealing your money. Of course, there are many pros and cons of KYC, and verifying it or not is your personal opinion. if you are more concerned yo your security then choose the exchange where KYC is mandatory if not then non KYC exchange will be good for privacy purposes