Emphasizing the Importance of KYC in Crypto Exchanges
Johnny Lyu, CEO of KuCoin, a leading cryptocurrency exchange, has underscored the crucial role of Know Your Customer (KYC) checks in protecting and recovering user funds in case of theft or hacking. As KuCoin prepares to adopt mandatory KYC checks, Lyu stresses that contrary to popular belief, privacy is not the primary feature of Bitcoin.
The True Purpose of Bitcoin, According to Lyu
Lyu explained that the core benefit of Bitcoin lies in its function as a unit of exchange, not privacy. This characteristic enables holders to hedge against economic recessions, a feature born out of the 2008 financial crisis and the United States’ subprime mortgage crisis.
KYC Measures to Protect Users’ Funds
While the argument exists that stringent KYC practices may impede on user privacy, Lyu affirms these measures’ importance. He believes such policies enhance user fund security by safeguarding asset ownership and enabling asset tracking in theft cases. In Lyu’s view, as cryptocurrency continues to integrate with the physical world, compliance becomes increasingly necessary.
The Inevitable and Healthy Stage of Crypto: KYC
Mandatory KYC checks represent an “inevitable” and “healthy” phase in the crypto development cycle, according to Lyu. In late June, KuCoin announced that it would introduce these checks for all new users from July 15, 2023. Existing non-KYC users will have trading access, but they will not be allowed to deposit new funds.
The Impact of KYC Restrictions on KuCoin
The introduction of KYC restrictions at KuCoin may temporarily affect the platform’s trading volumes. “Some may leave,” Lyu acknowledges. However, he remains optimistic about crypto exchanges’ compliance in the long term, noting that more compliant funds and users will bolster the industry’s future.
KuCoin: A Growing Platform with Enhanced Security
KuCoin currently boasts 27 million users, marking a 35% increase from last year. Following the KYC upgrade announcement, KuCoin’s trading volumes significantly rose from approximately $540 million to over $660 million, according to CoinGecko data. This upward trajectory signifies users’ confidence in KuCoin’s commitment to heightened security and compliance.
