Why is KYC mandatory in CEX?

[coinerer]

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?

The reason for making KYC mandatory is to prevent activities like money laundering. Because his kyc document will be given there. Whether or not to use a platform is entirely a personal matter for an individual. If you don't want to do kyc you can use DEX instead of CEX where no kyc is required. But if you are using CEX then you need to complete kyc as it falls within their terms & conditions. And to use their service must follow their terms & conditions

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[Ale88]

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 necessarily need to hack the whole exchange, you can just get access to a single profile and then steal whatever is in it. Unfortunately still nowadays many people don't use 2FA and their passwords are extremely easy to guess, that is the real problem. People should understand that they need to use all the security tools the exchanges provide, and especially avoid using the phone number to receive texts, etc.

[salad daging]

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?

The reason for making KYC mandatory is to prevent activities like money laundering. Because his kyc document will be given there. Whether or not to use a platform is entirely a personal matter for an individual. If you don't want to do kyc you can use DEX instead of CEX where no kyc is required. But if you are using CEX then you need to complete kyc as it falls within their terms & conditions. And to use their service must follow their terms & conditions

And because of local regulations when they experience problems such as money laundering, the platform can find out by doing the documents provided, so the exchange will apply KYC to all users not just for large transactions.
With you already doing KYC, any activity will be known by the centralized platform, so inevitably KYC must be an obligation for us at CEX. If there are other options then use a less strict one because there are still some that enforce this if you want to be completely anonymous then indeed DEX is the solution, but I'm sure more use CEX than DEX.

[Bushdark]

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?

The reason for making KYC mandatory is to prevent activities like money laundering. Because his kyc document will be given there. Whether or not to use a platform is entirely a personal matter for an individual. If you don't want to do kyc you can use DEX instead of CEX where no kyc is required. But if you are using CEX then you need to complete kyc as it falls within their terms & conditions. And to use their service must follow their terms & conditions

There are many reasons why KYC is mandatory on centralized exchanges and is mostly because of the government interest on certain matters. Apart from the government too, the exchange need to be prepared for the worse in case something happens that need to very the identities of users mostly when something like scam and hacks happen.

 Know your customers help centralized exchange to check in on who there customers are and how they make transactions whether it involves money laundry or not. The centralized exchanges are mostly government influenced.

[Kasabus]

CEX are highly regulated by groups or entities, so it’s also expected that this exchange in return will also follow what the regulators have imposed to them. And this compulsory KYC is one factor that will make an exchange more centralized and monitored by the government or any other group or entity. That’s why if you are in a centralized exchange, consider KYC as compulsory.

[Mr.right85]

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?

Good enough it’s what you think should be the case and that isn’t what is for some good reason. Maybe not to user’s advantage but, it sure do helps the exchange with regards to authorities which in turn, ensures there are these services for crypto investors to use.

KYC is simply a an avenue for these firms to have some idea on whom there customers are. That’s not so much but, where it becomes an issue is, what would these guys do with this data, who are those it’s exposed to, how could they be sure it doesn’t fall into the wrong hands and more of concerning questions as those. That’s where the issue always comes in. That’s why it’s cool to use that which makes you feel safe or you could trust.

Don’t forget, these are centralized exchanges and they’ve got to play in accordance with the laws of the jurisdiction in which they operate to avoid being short down.

[jeraldskie11]

CEX are highly regulated by groups or entities, so it’s also expected that this exchange in return will also follow what the regulators have imposed to them. And this compulsory KYC is one factor that will make an exchange more centralized and monitored by the government or any other group or entity. That’s why if you are in a centralized exchange, consider KYC as compulsory.

When we utilized CEX, we had to go through a KYC process before we could withdraw, and if we didn't, we could only withdraw a small amount of money till we submitted. If the exchange do not have KYC, your payment options are limited to banks that agreed in your terms and conditions that you would not utilize KYC.

Because CEX users are transparent to them, it may put their identities at danger of being sold to criminals, particularly those with the most money in their wallet. Because they are worried of this, many crypto users choose to use DEX. Even if I only have a modest budget, I'm still afraid but it's preferable to utilize CEX because there's no hassle.

[virasog]

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?

The reason for making KYC mandatory is to prevent activities like money laundering. Because his kyc document will be given there. Whether or not to use a platform is entirely a personal matter for an individual. If you don't want to do kyc you can use DEX instead of CEX where no kyc is required. But if you are using CEX then you need to complete kyc as it falls within their terms & conditions. And to use their service must follow their terms & conditions

CEX needs to abide by government laws and regulations. Therefore they take proactive measures by enforcing KYC so that in future if they are questioned about the illegal use of money (Money laundering etc), they have the details of the person and they can give this data to the authorized agencies upon request. If the CEX won't implement the KYC, they can get into trouble themselves.

Also, I think people may report that a certain CEX is running without the KYC and it can lead to the closure of their business by the authorities. In simple words, it's hard to run an exchange business without implementing the KYC.