The burgeoning cryptocurrency exchange Bitget is poised to impose stricter know-your-customer (KYC) protocols effective from September 1, in an attempt to counter the perceptions of inadequate diligence in vetting clients. Regulatory institutions have been vocal in their criticism of the leniency in KYC procedures within crypto exchanges, citing instances of fraud, money laundering and even terror-financing as possible fallout.
Emerging from Singapore, Bitget is revising these procedures for users wishing to initiate deposits or engage in trading across the platform. New patron members will be expected to surpass level 1 KYC verification process, necessitating the submission of an identity document – such as a passport – and clear facial recognition confirmation. An extension has been granted to existing members of the platform until October 1 to comply with these rules.
In the absence of completion, however, the users will still maintain the capability to withdraw and cancel orders, or shift their position, albeit the right to execute trades will be withdrawn. The introduction of these measures comes in response to the increasing scrutiny over KYC norms within cryptocurrency exchanges. In the eyes of regulators, their laxity results in providing loopholes to those operating in the shadows of the law, culminating in economic crimes and fostering an environment of financial insecurity.
Larger rival, Kucoin has already initiated a similar program earlier in June, aiming to strengthen their KYC standards. This graphic discrepancy in the methods employed by these exchanges prompts the question – How economics of trust can be manifested and maintained in a trustless system like Blockchain?
Bitget, boasting a user base of 20 million globally and a 24-hour trading volume of roughly $310 billion clearly understands the significance of credibility while handling such amounts. To compare, Kucoin claims 27 million customers by the end of 2022, while Crypto behemoths like Binance and Coinbase, attested to having more than a hundred million users.
In conclusion, imposing stricter KYC mandates might ward off potential troublemakers and add to the overall credibility of cryptocurrency industry. However, it could also lead to limitations for otherwise genuine crypto enthusiasts who struggle to follow the regulations due to circumstantial constraints. Thereby, an overhaul of the KYC processes across the cryptocurrency industry appears to be a double-edged sword that has the potential to elicit both appreciation and criticism.