In a Bloomberg interview with CZ, which is the nickname of Binance CEO, Changpeng Zhao, discussing Binance’s newly released ‘10 fundamental rights for crypto users,’ he admitted that his exchange, the largest exchange by volume, lost about 3% of its customers due to the KYC requirements the company imposed as a result of regulatory pressure.
When asked if users left the platform due to tightening compliance, he stated:
“We have chosen to go with full compliance, full mandatory KYC for global users, for every feature. We feel that being compliant will allow more users to use us. Most people do feel more comfortable using a licensed exchange. Most people – 96%, 97% of users – go through KYC. We only lose 3% of the users.”
What you should know
KYC is a practice used by cryptocurrency exchanges and traditional financial institutions. It enables companies to verify a user’s authenticity by requesting some form of real-world identification.
Binance made KYC compulsory for all its existing and new users, on the 20th of August 2021, in order to access its products and services such as cryptocurrency deposits, trades and withdrawals.
During the cause of the interview, CZ was asked about the efforts Binance has made in winning over regulations. He had this to say:
“We have had many interactions where the regulators are skeptical with us at first, and then as we communicate more and more with them, the attitudes do change.”
He further stated, “In-person meetings are important. Just having that first interaction in person is important. For me personally, unfortunately over the last two years, we weren’t able to travel. But over the last couple of months with travel restrictions being lifted in different places, I have been travelling. 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.”
CZ also gave a few comments on the Squid token investigation. As earlier reported by Nairametrics, a squid token created on the BSC rallied by over 230,000% to about $2,800, only to crash to trade less than a cent. He stated, “If the project teams hide their tracks very efficiently, it may take a long time to discover who they are. That’s one of the downsides of decentralized. And they may be anywhere in the world. It may take a very concerted effort to actually find them.”
He further emphasized the need for education in the cryptocurrency space, stating, “Education is the best preventive measure for this type of situation. It’s very important for users to understand that everything they do, everything in this world has risks. You’ve just got to understand what those risks are and deal with it accordingly.”
When asked about what innovations in the cryptocurrency space interest him, he stated, “We’re seeing these new types of finance tools which are much more inclusive. In addition to play-to-earn, there’s study-to-earn – which was brought to me by a project. While students are studying, they can earn different coins, and they can actually pay because the coins do have value. Now moving forward, you’re probably going to see many innovative use cases where you can do anything-to-earn.”
Speaking on the squid game debacle, CZ also added, “Don’t invest in projects that you don’t know well and don’t trust. If you do, be prepared, know that if you have limited information, these rug pulls could be possible.”
Binance’s native token, BNB was trading at $571, down 3.73% as of the time of this writing.