In light of recent regulatory crackdowns and backlash, global crypto exchange Binance is easing customer verification requirements across its platform. More specifically, the exchange is tightening its previously lax know-your-customer (KYC) requirements.
New customers who want to use Binance’s services will be required to complete the platform’s intermediate verification processes, which include basic information, government ID, and facial verification, beginning immediately.
Non-verified customers are now barred from depositing and withdrawing funds, in addition to having access to Binance’s products and trading services. Clearly, this is a significant shift for the exchange, as previously, Binance only required ID verification for users seeking higher trading limits.
Existing and returning users who have not completed the updated verification processes will be limited to a limited number of services, including withdrawal, canceling orders, and closing positions, according to Binance.
So, why is Binance taking such drastic steps and cracking down on unverified customers? According to a 2019 report from Chainanalysis, Binance was responsible for facilitating 27.5 percent of illicit activity-related transactions — more than any other exchange.
Binance may be losing goodwill from global legislators as a result of recent regulatory issues.
Cryptocurrencies have long been associated with money laundering. However, as cryptos and digital assets become more mainstream, regulators have begun to seriously consider the implications of the burgeoning industry.
US Treasury Secretary Janet Yellen and SEC Chair Gary Gensler have advocated for tighter regulation of the cryptocurrency industry, citing tax evasion and money laundering loopholes. Binance was previously investigated by the Internal Revenue Service and the Department of Justice in May over similar allegations.
Furthermore, earlier this week, the Dutch Central Bank accused Binance of failing to comply with the country’s anti-money laundering (AML) laws. It remains to be seen whether Binance’s efforts will be sufficient to satisfy financial regulators worldwide.