Among KuCoin exchange is poised to adopt mandatory know-your-customer (KYC) checks, with the company’s CEO arguing that privacy is not the most important feature of Bitcoin (BTC).
“When it comes to what Bitcoin was created for, I think privacy is just one of its characteristics,” KuCoin CEO Johnny Lyu told Cointelegraph in a July 4 interview.
Lyu said that the core benefit of Bitcoin is not privacy, but a unit of exchange that allows holders to hedge against the risk of recession. The CEO mentioned that Bitcoin was created after the 2008 financial crisis, which was triggered by the subprime mortgage crisis in the United States. “These events led to the birth of Bitcoin,” Lyu noted.
While some may consider overly strict KYC practices bad for users as they may limit personal privacy, the KuCoin CEO believes that such policies are more useful than none as they increase the security of users’ funds.
“The purpose of KYC is to protect the public’s assets and ensure that assets are protected on two different levels,” Lyu said, adding:
“The first layer is ownership, so you know the money is yours. The second layer is you can actually trace your assets in case they are stolen. So if you lose an asset, we will be able to trace the source and make sure The source is clean.”
The KuCoin CEO went on to say that the cryptocurrency industry will increasingly interact with the physical world, which is why compliance is a necessity.
“So essentially, in the entire development cycle of a cryptocurrency, I would say, KYC, this is an inevitable phase, and it’s also a very healthy one,” Lyu added.
KuCoin officially announced in late June that starting from July 15, 2023, all new users on the platform will be subject to mandatory KYC checks. If KYC is not completed, newly registered users will not be able to use KuCoin’s products and services. Meanwhile, existing non-KYC users will still be able to trade, but depositing new funds will be limited.
The KuCoin CEO told Cointelegraph that the new KYC restrictions could affect the platform’s trading volume in the short term.
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“We know that in the short term, as the rules become stricter for certain clients, some may leave,” Lu said. However, KuCoin remains bullish on cryptocurrency exchanges’ compliance in the long run, adding:
“But in the long run, more compliant funds and users will enter this industry in the future, which is equivalent to opening the door better for everyone and making users feel more secure.”
According to KuCoin, the platform now has 27 million users, a 35% increase from its user base have a year ago. Following the KYC upgrade announcement, KuCoin’s trading volume surged from about $540 million to over $660 million at the time of writing, according to Data from CoinGecko.
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