Major crypto exchange Binance took a compliance-friendly approach to its business after years of cat-and-mouse game with regulators around the world and it worked surprisingly well in terms of user retention, according to a new interview with Binance CEO Changpeng Zhao.<\/p>\n
Speaking to Bloomberg News, CZ noted\u00a0that Binance made Know Your Customer (KYC) processes mandatory \u201cfor global users, for every feature\u201d in a bid to attract new users as a regulatory-compliant business. He revealed that Binance lost about 3% of the users after making KYC obligatory. <\/p>\n
Binance didn\u2019t immediately respond to Cointelegraph\u2019s request for confirmation.<\/p>\n
KYC is a common practice used by crypto exchanges and traditional financial institutions. It enables companies to verify a user\u2019s authenticity by requesting some form of real-world identification. Binance made KYC an obligation for all of its existing and new users on Aug. 20 to access its products and services like cryptocurrency deposits, trades and withdrawals.<\/p>\n
\u201cWe feel that being compliant will allow more users to use us,\u201d CZ said, adding that most people do feel more comfortable using a licensed exchange.<\/p>\n
Binance touted its decentralized, no-physical-headquarters structure for years until CZ announced in July that the crypto exchange is ready to work with local regulators by saying, \u201cWe want to be licensed everywhere. From now on, we\u2019re going to be a financial institution.\u201d<\/p>\n