From now on, new users who enter the Bitcoin (BTC) and cryptocurrency exchange Binance will have to complete a new identification process
This process requires providing personal information, uploading photographs of the identity document and completing a facial identification test.
According to the company, the objectives of making this process mandatory, which until now was optional, are 3. The first of them is “to determine changes and improvements in light of global compliance standards”; the second is “improve user protections”; and the third is “to provide a secure cryptocurrency environment for all.”
“Existing users who have not yet completed mid-term verification will have their account permissions temporarily changed to ‘Withdrawal Only’.” This will only allow them to withdraw funds and cancel operations with crypto assets that they have open within the exchange platform.
However, “to minimize the interruption of the user experience”, the restriction of services will be carried out in phases. In addition, once users complete the mid-term verification, if they wish to do so, they will be able to fully operate in Binance.
This type of measure, known as KYC, acronym in English for “know your customer”, are required by financial regulators at an international level with the aim that all participants of the regulated cryptocurrency ecosystem are identified. The arguments frequently put forward in favor of this practice are to avoid money laundering and the financing of terrorism.
Until now, on Binance, KYC verification was not mandatory, although there were withdrawal limits (up to 2 BTC per day) and trading limits available (for example, they could not do P2P exchanges) for those who decided to trade without providing the exchange with proof of identity.
Facial recognition is one of the new stages to continue trading with Binance
The intermediate verification, which will now be the minimum requirement of this exchange, enables users to deposit in cryptocurrencies the equivalent of a maximum of US $ 50,000 a day or $ 500,000 a month. The withdrawal limit is 100 BTC per day, or its equivalent in other crypto assets.
In addition, this level of verification enables clients to be able to carry out OTC (over-the-counter) operations in case they want to operate with large amounts and allows them to request the Binance card in those jurisdictions where it is available.
Binance: regulation ‘ensures taxes are paid where they are due’
Binance Academy, which is an educational web portal developed by this company, published a text in which it explains why, according to the company, the KYC process is necessary in the bitcoin and cryptocurrency industry.
Due to the pseudonymous nature of cryptocurrency, it is often used for laundering illicit funds and tax evasion. Better regulation of cryptocurrencies improves your reputation and ensures that taxes are paid where they are due.
The aforementioned educational portal, owned by Binance, ensures that the KYC process is necessary for three reasons. The first of these is the irreversibility of transactions with bitcoin and other cryptocurrencies. “There is no manager to help you if you make a mistake, which means that funds can be stolen or moved and not recovered,” they explain.
The reasons and procedures for these new requirements are explained in rigorous detail at Binance Academy
On that point they do not add if, in case a user makes a mistake (for example, withdrawing cryptocurrencies to the wrong address) from now on they would change something and their funds would be refunded, which seems unlikely.
Second, Binance notes that the identity verification process is important because “cryptocurrencies are fairly anonymous (pseudonymous)” and “you don’t need to submit any personal data to open a cryptocurrency wallet.”
As a third and final aspect, the exchange house of Chinese origin explains, although without giving more details, that “regulation is uncertain with regard to taxes and the legality of cryptocurrencies in many countries.”
The same statement adds that “mandatory KYC is very difficult to implement” and that “there is an additional cost associated with conducting KYC verifications that are often passed on to the customer through fees.” So far Binance has not announced an increase in its commissions due to the new measures.