KuCoin, a popular cryptocurrency exchange, is making preparations to implement mandatory Know Your Customer (KYC) checks. In a recent interview with Cointelegraph, KuCoin CEO Johnny Lyu discussed the importance of privacy in Bitcoin and the benefits of KYC measures.
Contrary to popular belief, Lyu argued that privacy is not the most significant aspect of Bitcoin. He emphasized that the core advantage of Bitcoin lies in its function as a unit of exchange, particularly during economic downturns. Lyu pointed out that Bitcoin emerged in response to the 2008 financial crisis, which was triggered by the US subprime mortgage crisis. In essence, Bitcoin serves as a hedge against recessions.
Regarding KYC checks, some individuals argue that they infringe upon users’ privacy. However, Lyu believes that these policies enhance the security of users’ funds, making them more beneficial than restrictive. KYC measures are designed to protect the assets of the public and ensure that users can track their assets in case of theft. Lyu explained that KYC provides two levels of protection: ownership verification and asset traceability.
Lyu predicted that the cryptocurrency industry will continue to interact with the physical world, making compliance measures inevitable. He stated that KYC is a necessary stage in the development cycle of crypto and is crucial for its healthy growth.
In late June, KuCoin officially announced the introduction of mandatory KYC checks for all new users starting from July 15, 2023. Without completing the KYC process, newly registered users will not be able to access KuCoin’s products and services. Meanwhile, existing non-KYC users will still be able to trade but will be restricted from depositing new funds.
Lyu acknowledged that these new KYC restrictions may have a short-term impact on the platform’s trading volumes. However, he remains optimistic about compliance in the long term. According to Lyu, as the rules become stricter, more compliant funds and users will enter the industry, leading to increased security for all participants.
Despite the implementation of mandatory KYC, KuCoin continues to experience significant growth. The platform currently boasts 27 million users, marking a 35% increase from the previous year. Following the KYC upgrade announcement, KuCoin’s trading volumes have already shown a notable increase from around $540 million to over $660 million. This surge in trading activity reflects growing confidence in the platform’s commitment to security and compliance.
In conclusion, KuCoin’s CEO emphasizes the importance of Bitcoin’s function as a unit of exchange and views KYC measures as crucial for maintaining the security and integrity of the cryptocurrency industry. While some may express concerns about privacy, Lyu believes that the benefits of KYC outweigh any potential drawbacks. As KuCoin continues to grow and implement stricter compliance measures, it aims to provide a secure and trustworthy environment for cryptocurrency users.
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