Topic: Why is KYC mandatory in CEX? - page 5. (Read 888 times)
KYC is not entirely a bad implementation but it varies on the various exchanges in the sense that some are quite easy and doesn't require in-depth information on you as a customer so your privacy is still respected. Lol I remember when I had to do KYC on Bybit I felt like they were being too extreme but I knew it was necessary. You asked about Bitget, I think theirs is quite flexible.
Another thing is, when it comes to airdrops the owner of that project has some way to prevent duplicates and one of them is to make their participants do KYC in order to prevent them from getting double rewards
Too many of these airdrops are scams and they require their participants to submit kyc information to them, which they will later sell to bad actors in the black market for a few dollars. I don't recommend users to give their data to any service, but i can understand if they give this data to centralized exchanges, but for airdrops or faucets, it is a no for me, it is surely not worth it to pass kyc because of worthless stuffs like airdrops or faucets, the risk outweighs the benefits. 
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?
Those are the ideals behind bitcoin which created this market, but you cannot hope for the governments to abide to them right? Why should they? When what they have pursued for a long time is the complete opposite and they do not want a single transaction to be out of their scrutiny, this is why they are pushing so hard for the disappearance of cash by limiting what you can do with it, and it is also why they are pushing for people to use their CBDCs as this will put them in complete control of your finances. 
Another thing is, when it comes to airdrops the owner of that project has some way to prevent duplicates and one of them is to make their participants do KYC in order to prevent them from getting double rewards or sometimes this is their way to not distribute the rewards for others because in the first place, they tricked their participants and they just implemented these rules in the last minutes when they are about to distribute the rewards for airdrops or bounties.
CEX Means Centralized Exchange which indicates it has been controlled by central authority. So basically all the exchanges operate worldwide and cooperate with legal authorities. Exchange is obliged to provide users data in case any legal authority asks. So they are forcing us to pass KYC by submitting our legal documents. Nowadays it's hard to find exchanges without KYC. Though there were a few exchanges like KuCoin where KYC wasn't mandatory there were withdrawal limits. But day by day all the centralized exchanges requiring pass KYC to use the exchanges.
I think government want to reduce the use of cryptocurrency for illegal transaction so government want to increase it trace ability. honestly I am okay with KYC as long as they only use it prevent criminal activity. but I am afraid that government do abuse of power by force the citizens to pay tax or pay anything to increase country revenue which they will corrupt it. honestly I think the taxation system in my country is unhealthy and weighing the citizen, in my opinion those people who work in that related institution are too slick. I hope there are more wise, good and honest people who manage my country in the future and replace the bad people. I hope for the better in 2024.
Governments are concerned about illegal activities through cryptocurrencies. And they think that most of this activity is done through cex like Binance. They have a large user base and their P2P system is widely used all over the world. SEC is targeting these exchanges by saying they are involved with these types of activity. So they do not have any other option but to force their user to do KYC. If someone is not doing anything illegal they shouldn't be afraid of it or if someone thinks they should not share their identity then dex or P2P is the best option.
then it would be understandable that they would really be involved into it and there's no escape to that. You could still make use of known CEX platforms that we do have as of today but it would really be entitizing you to have that kind of verification since you cant really make use outmost of its features like p2p or something like that or having restrictions or small limits when it comes to deposit or withdrawal on which it do really sucks if you dont really comply with those simple verifications but its true that you could really still make use of the platform but of course with limited features or usage
on which it would be leading you no choice but to comply and submit those KYC but well you do still have the option on not to and it would really be entirely depending on your needs.
I think government want to reduce the use of cryptocurrency for illegal transaction so government want to increase it trace ability. honestly I am okay with KYC as long as they only use it prevent criminal activity. but I am afraid that government do abuse of power by force the citizens to pay tax or pay anything to increase country revenue which they will corrupt it. honestly I think the taxation system in my country is unhealthy and weighing the citizen, in my opinion those people who work in that related institution are too slick. I hope there are more wise, good and honest people who manage my country in the future and replace the bad people. I hope for the better in 2024.
Governments are concerned about illegal activities through cryptocurrencies. And they think that most of this activity is done through cex like Binance. They have a large user base and their P2P system is widely used all over the world. SEC is targeting these exchanges by saying they are involved with these types of activity. So they do not have any other option but to force their user to do KYC. If someone is not doing anything illegal they shouldn't be afraid of it or if someone thinks they should not share their identity then dex or P2P is the best option.
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?
afaik, exchanges that previously did not require KYC have now changed to requiring KYC because developers are under considerable pressure from governments in several countries. Moreover, currently Bitget has quite high daily transactions so that in order to survive they have to comply with the government and its regulations, but if you really don't like doing KYC, you should avoid using CEX, just use P2P which doesn't require KYC.
However, they maintain customer privacy and kyc documents are secured with a special encryption method. so kyc is not a problem for any reputable CEX
This is not true. You cannot be certain that your data is safe with centralized exchanges, so many exchanges and services that hold people's data have provably been hacked and the stolen data being sold in the black market. These exchanges promise to keep your data safe, but you are not sure which of them is next to be hacked or if your data would even be sold for a few dollars in the dark web if that happens. 
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?
As you told privacy is important and if it comes to cryptocurrency then it will be more important. So the exchange does this just for the protection of their users. It secures to not do any illegal activities like money laundering because every user is known to them so it is difficult to do so. This KYC helps us to protect from any fraudulent activity or scam which is the basic need for users. In the case of Aridrops, they provide tokens to a lot of users so in that case KYC is important If Aridrops does not ask about personal information then maybe it will close you to some type of scams. 
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?
Not all CEX have made kyc mandatory yet many exchanges can be used without kyc but popular and reputable exchanges have made kyc mandatory like Binance, Kucoin etc. The reason for making kyc mandatory is to add p2p facelifts and keep customers away from corruption. However, they maintain customer privacy and kyc documents are secured with a special encryption method. so kyc is not a problem for any reputable CEX hero member
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I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?
KYC is not for anyone, whether they are transacting a huge or small amount of Bitcoin, for security and privacy sake. CEX requires KYC because that is also one policy that they need to follow before they can gain authorization for operation. Although not every CEX makes it mandatory for you to pass KYC before you can withdraw from the exchange, Kucoin, MEXC, and some other CEX can allow you to deposit and withdraw without having to pass KYC, but they have a daily limit on withdrawals if you have not passed KYC. There are some P2P exchanges (e.g., Bisque) where you don't also need to pass KYC before you can buy or sell Bitcoin, but some of those CEX don't have enough liquidity.
As others have explained, it's usually enforced because exchanges don't want to be sued for not complying with AML legislation. Of course, it can also help exchanges perform their own analysis to minimize the risks of criminals using their services for malicious purposes. But I agree that KYC is often enforced too much. It makes sense to me that people who are dealing with significant amounts of money should provide some documentation because there's a rick of big-scale money laundering. But if a person's dealing with small amounts, it's highly unlikely that it's anything that should be of interest to the authorities. So the balance between fighting crime and respecting privacy is not in place when there's a KYC, regardless of the amount of money in question.
Yeah, exchanges enforce KYC to comply with AML. But the "one-size-fits-all" approach is incorrect. Its like finding gold in sand. Small crypto players may unintentionally violate their privacy due to the same regulatory web as large ones. Its the silent loss of privacy rights. Exchanges should use a tiered KYC approach where information requirements increase with transaction volume. Privacy is both a right and a cornerstone of decentralization.
As others have explained, it's usually enforced because exchanges don't want to be sued for not complying with AML legislation. Of course, it can also help exchanges perform their own analysis to minimize the risks of criminals using their services for malicious purposes. But I agree that KYC is often enforced too much. It makes sense to me that people who are dealing with significant amounts of money should provide some documentation because there's a rick of big-scale money laundering. But if a person's dealing with small amounts, it's highly unlikely that it's anything that should be of interest to the authorities. So the balance between fighting crime and respecting privacy is not in place when there's a KYC, regardless of the amount of money in question.
Yeah, exchanges enforce KYC to comply with AML. But the "one-size-fits-all" approach is incorrect. Its like finding gold in sand. Small crypto players may unintentionally violate their privacy due to the same regulatory web as large ones. Its the silent loss of privacy rights. Exchanges should use a tiered KYC approach where information requirements increase with transaction volume. Privacy is both a right and a cornerstone of decentralization.
As others have explained, it's usually enforced because exchanges don't want to be sued for not complying with AML legislation. Of course, it can also help exchanges perform their own analysis to minimize the risks of criminals using their services for malicious purposes. But I agree that KYC is often enforced too much. It makes sense to me that people who are dealing with significant amounts of money should provide some documentation because there's a rick of big-scale money laundering. But if a person's dealing with small amounts, it's highly unlikely that it's anything that should be of interest to the authorities. So the balance between fighting crime and respecting privacy is not in place when there's a KYC, regardless of the amount of money in question.
Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users,
Exchanges are regulated and bitcoin is not, for this exchanges being regulated, one of their requirements needed is KYC because it's part of their conditions signed, also know that government will always make demands on tgiw information anytime from them in case of any investigation on AML and other fraudulent activities, as long as they are centralized, they already know by default that KYC is what they can't escape.
In my country, official cryptocurrency exchanges enforce Know Your Customer (KYC) procedures to prevent money laundering practices, as well as to facilitate the deduction of cryptocurrency taxes through the relevant exchange platforms. Regardless of the size of the cryptocurrency being transacted, all users must undergo KYC verification in order to initiate withdrawals of their funds.
The Indonesian government imposes a 0.1% tax on each crypto-fiat transaction and vice versa. The more frequent the trading activity, the higher the tax liability for the trader. Tax data is reported to the government using my personal KYC information and is displayed in real-time on the user dashboard.
Here's an example of the tax deduction display for a trade I conducted on a local exchange in Indonesia.
The Indonesian government imposes a 0.1% tax on each crypto-fiat transaction and vice versa. The more frequent the trading activity, the higher the tax liability for the trader. Tax data is reported to the government using my personal KYC information and is displayed in real-time on the user dashboard.
Here's an example of the tax deduction display for a trade I conducted on a local exchange in Indonesia.
Exchanges require KYC in order to stop fraud like stealing other people's bitcoins and cashing them out, money laundering, scams, hacks, and so on. Most countries require an exchange to have specific KYC measures because they are legally allowed to operate there.
Although I will say that requiring KYC for very small transactions is a bit of a stretch, as it's not really possible to do much with it in the first place.
You’re right. Imposing mandatory KYC is done so that all users will be protected from all forms of fraud, thus maintaining their assets privacy throughout their transactions. However, those disreputable and shady exchanges are also taking advantage from KYC verification by easily stealing funds from their users, hence making some of their clients easily fall on their traps. Although I will say that requiring KYC for very small transactions is a bit of a stretch, as it's not really possible to do much with it in the first place.
Privacy is important to users, but to centralized exchanges, they are like a company and they need to comply with the law if they want to stay in business. Furthermore, KYC also has advantages such as avoiding fraud, money laundering, hacking...KYC has many benefits. But what people fear is whether our identities are really protected by exchanges or if they are using them illegally. Everything has pros and cons and depending on each person's preference we choose CEX or DEX.
The fear is that customer personal information can be stolen or sold to scammers or other businesses. This information is also prone to hacks that can have some negative consequences. There are also cases where employees of the CEX platform leak client's data to the public, so they cannot be trusted. DEX will always be a good option regardless of the benefit most CEX claim to offer. There is no denying the vulnerabilities that KYC causes but to say that DEX is a better option than CEX I do not think so. I don't believe everyone here doesn't use CEX, even many people still talk bad about CEX every day but still use it silently. We cannot deny the convenience that CEX brings. If you are a day trader, you don't use CEX then what do you use to make profits? Futures traders, or even sharks, use CEX if they want to trade or sell large amounts of assets. We shouldn't deny that about CEX.
If the centralized exchange implement KYC because they said it's to enhances their security, it's a bullshit.
If they tell this, it's bullshit.KYC only help exchanges to obey governmental regulations and avoid troubles with governments. It does not help to increase their exchange security because security belongs to different thing and it is built and maintained by different infrastructures.
Why KYC is extremely dangerous – and useless
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