KuCoin’s statement on Wednesday, June 28, indicated it would strictly subject all new users to the identity verification process. The exchange indicated that the new users would not access any service offered by the platform unless they submit the details required in the know your customer checks (KYC).
KuCoin’s statement indicated that the KYC requirements extend across the user community. In particular, it suggests that users identified as non-KYC users must fill out the identity checks. The non-KYC users will be locked out from depositing due to failure to complete the checks.
KuCoin Sets Mid-July Deadline to Enforce Mandatory KYC Requirements
The introduction of mandatory identity checks is set to strengthen the KYC system. The upgrade aims to improve KuCoin’s compliance with anti-money laundering regulations.
The firm indicates that the KYC authentication upgrade is set to start on July 15, 2023. Failure to complete the new requirements will compel KuCoin to deny access to the products and services exchange suite.
The statement requires the existing users who will, by July 15, exist in the crypto exchange system, will also need to update their identity details to avoid losing access to several KuCoin services. In particular, the users will not access deposit services for new funds. The announcement clarifies that such users will continue withdrawing their funds.
The KuCoin’s announcement guaranteed the existing users access to initiate sell orders for spot trading alongside the margin and futures trading deleveraging. Other services that existing users labeled as non-KYC compliant will access are the KuCoin Earn, staking, lending hub, and redemption of the exchange-traded funds (ETFs).
Unpacking the New Requirements for KYC Policy Compliance
KuCoin chief executive Johnny Lyu detailed that a compliant KYC process mandates the user to furnish the identification number, photo, and corresponding name besides undergoing the facial recognition process. The chief executive observed that KuCoin has invested in a superior system to verify the identification of the user relative to the applicable laws and regulations to the jurisdiction of origin.
Lyu added that the updated KYC process obligates the customer to furnish additional identifiers besides one’s name. He notes that the user should produce the national identification number, birth date, and respective physical address.
KuCoin’s KYC Adaptable to Governing Laws
Lyu explained that the KuCoin KYC process is guided by the laws and regulations applicable in the user’s jurisdiction. He added that the crypto exchange would need information pertaining to the user’s business and aggregated risk profile. The senior executive outlined the risk profile to feature data such as trading activity volume, nature, and source of virtual fund deposits.
The CEO revealed that the updated KYC requirement aligns with the guiding principle that KuCoin is always devoted to compliance. As such, he maintains that providing identity recognition has been an existing requirement.
Lyu confessed that KuCoin has entirely designed its KYC policy towards complying with the regulations that apply in the respective jurisdictions. Nonetheless, he rules out the existence of a unified standard for global KYC regulation. As such, it varies with the jurisdiction’s governing laws.
Widespread Ramification of Introducing Compulsory KYC
KuCoin’s executives clarified that the crypto exchange does not support the KYC utilized in the United States. He observed that neither the current nor the updated KYC aligns with the US.
Lyu illustrated that the KYC update would have a widespread effect on KuCoin users worldwide. He noted that the platform boasts over 20 million accounts by mid-2022. 11 months later, KuCoin will likely have expanded its users’ community by several millions.
KuCoin realizes a daily trading volume approximating $540 million, with monthly visits averaging 8 million. A review of CoinGecko data shows KuCoin triumphing over the US-based Kraken exchange, with its monthly visits averaging 5 million. Kraken’s daily trading volume is $380 million, several hundreds of millions below the KuCoin’s average.
Updating KYC Policies Becoming a Sweeping Tide in the Crypto Industry
KuCoin’s move to expand its KYC policy replicates similar initiatives by the Dubai-based Bybit exchange in May. The Bybit exchange imposed a cap on nonKYC users, preventing them from withdrawing funds exceeding 20000 tethers (USDT).
The executives noted the increased presence of cybercriminals leveraging laxity in enforcing KYC requirements. The incident emerged in April 2023 when criminals fetched $30 for verified crypto accounts on the darknet.
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