How many users left Binance after the identification requirement was introduced?

Binance CEO Changpeng Zhao (CZ) has shed new light on the exchange’s compliance roadmap and users’ view of Know-Your-Customer (KYC) so far.

Know Your Customer

Previously, Binance always took a compliance-friendly approach to his business after years of playing cat-and-mouse with regulators around the world. It worked surprisingly well in terms of user retention, according to Changpeng Zhao.

In a conversation with Bloomberg Zhao noted that Binance has mandated KYC processes for “global users, for every function.” This was introduced in an effort to attract new users as a compliant company. According to the crypto exchange, about 3% of users are said to have left the platform after KYC became mandatory.

KYC is a common practice used by crypto exchanges and traditional financial institutions around the world, among others. It allows companies to verify the authenticity of a user by requesting some form of identification. This can be done, for example, via a driver’s license or passport. Binance made KYC mandatory for all of its existing and new users on August 20 of this year. Without going through the process, users were no longer able to access Binance’s products and services. This also includes cryptocurrency deposits, transactions and withdrawals.

“We believe that if we are compliant, more users can use us,” said Zhao. He added that most people feel more comfortable with a licensed exchange.

“From now on we will become a financial institution”

For years, Binance praised its decentralized, non-physical headquarters structure. However, Zhao announced in July that the crypto exchange was ready to work with local regulators. The company stated:

“We want to have a license everywhere. From now on we will be a financial institution.”

In his interview, Zhao said that while regulators were initially skeptical about Binance, their attitude has changed as the communication has continued. “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.”

Binance recently established three subsidiaries in Ireland as part of Zhao’s vision to become a establish formal headquarters in various regions around the world. “When we first started, we wanted to embrace decentralized principles, no headquarters, work around the world, no borders,” Zhao said at the time. He added:

“It is now very clear to To run a centralized exchange, you need a centralized legal structure behind it.”