The identity verification procedure, or Know Your Costumer (KYC) in English, it is already well known by users of cryptocurrencies and every day more exchanges are carrying out this practice.
Going further, Coinone, South Korea’s big exchange, announced this Wednesday (29) that its users will only be able to withdraw cryptocurrencies to pre-registered addresses. Freezing cryptocurrency withdrawals from those who do not perform this process.
In the recent past, another major exchange, Binance, has also carried out a similar update to its usage policy. On that occasion, the brokerage set a deadline for withdrawals before they were blocked.
security or surveillance
It is worth noting that these actions have positive and negative points. Although this is already common in deposits and withdrawals of fiat currencies, such as the real, this practice is not used as often with cryptocurrency withdrawals like Bitcoin.
First, if someone has access to your account, the attacker will not be able to withdraw your cryptocurrencies, except for your wallet, that is, your funds are safer. In addition, KYC procedures also make exchanges more secure, being able to identify people linked to fraud.
The downside is the lack of privacy, which is relatively minor with address reuse. This way, others will be able to monitor your transactions more accurately, which can be a real danger as this information can be used for crimes such as extortion, including that of governments.
Therefore, this implementation should be optional, with each user being able to decide whether they want to use it or not. As a result, the P2P market, which does not require intermediaries, is growing.
In the case of Coinone, customers must register their external portfolio between December 30, 2021 and January 23, 2022, since on the 24th the mechanism will already be implemented.
“According to the implementation of the client verification system, the procedure for registering the client’s external portfolio will be implemented. After the implementation schedule, the withdrawal of virtual assets for unregistered portfolios is restricted.”
Beware of KYC
Another bad business model of some centralized exchanges is allow the deposit of cryptocurrencies without asking for any KYC process and then stop your withdrawals. In other words, your money is tied up until you can complete the process.
Because of that, it is It is recommended that you read the terms of the exchange you wish to use, as well as make a small deposit to test the withdrawal process for the platform in question..
Finally, KYC practices divide opinions due to the facts mentioned above. After all, although they bring security, they can also be used for surveillance by third parties.