Crypto exchange giant Binance said that the compliance-friendly approach after huge regulatory pressure worked amazingly well in the retention of users. During an interview with Bloomberg, the company’s CEO, Changpeng Zhao (CZ) revealed that many users left the crypto exchange after making the Know Your Customer (KYC) process mandatory.
After years of a cat-mouse game between Binance and regulatory bodies from all around the world, the company finally settled on making KYC compulsory for using any feature for all global users to attract new users as a regulatory-compliant business.
Zhao revealed that surprisingly, Binance lost around 3% of its users after making the KYC process mandatory. He added that most of the users feel more comfortable with a licensed exchange and stated:
“We feel that being compliant will allow more users to use us.”
Regulatory bodies are fine with Binance now
Exchange giant is working hard to comply with the regulatory body. As TheCoinRise reported in October, Binance appointed its first Chief regulatory Liaison officer. In July, Zhao, after many years of fight with regulatory bodies, finally announced that it was ready to join work with local regulators by being licensed everywhere. It stated:
“we’re going to be a financial institution.”
During the interview, Zhao added that despite crypto regulators being skeptical about Binance in the beginning, they have changed their attitude as the communications continued. He adds, “when people see me in person, they say, ‘look, CZ is very reasonable, very calm, not a crazy guy.’ So that helps establish their trust much faster.”
Crypto exchanges and regular financial institutions both implement KYC as a standard practice. It allows businesses to authenticate a user’s identity by requiring some type of real-world, government-issued identification. On August 20, Binance made KYC a requirement for all existing and new customers to access its products and services, including cryptocurrency deposits, trading, and withdrawals.