Bitcoin exchange Binance has announced changes to its account verification policy, which implements mandatory, hardened Know-Your-Customer (KYC) procedures for all users. Effective immediately, all new users must provide additional personally identifiable information (PII) in order to access Binance services such as deposits, trades and withdrawals. Existing users will lose access to most services, except revocation, until they provide the required PII.
The new requirements mean that from now on all Binance users have to go through a more extensive identity verification process called “intermediate verification” on the platform. The “Basic Verification” starter verification status, which required a user’s full name, nationality, date of birth, and home address, is no longer valid. To trade BTC or other cryptocurrencies on Binance, users now need to go beyond the basic verification and upload photos of a government-issued ID and selfie, as well as undergo a live facial verification. All data is sent to the exchange’s servers and staff, who personally review it and either approve or reject it.
“Binance announces these measures to support their efforts to Know Your Customer (KYC) and anti-money laundering (AML),” the statement said, citing “increased user protection” and the need to “fight financial crime” as the basis lying motives the changes.
While some of the purported reasons for KYC appear legitimate – to prevent financial criminal activity and terrorism – the long-term effectiveness and downstream consequences of these tactics are seldom discussed. Instead, advocates of offensive tactics around the world consider KYC / AML to be the holy grail for fighting crime, even if it often doesn’t deliver and ultimately increases the attack surface for each individual.
In addition, it is reasonable to assume that criminals will be able to fully adapt to and circumvent KYC procedures in the short term. As processes adapt to include more use cases and more illegal activity, bad actors do so too, turning it into a game of cat and mouse with greatly reduced effectiveness. But more importantly, having a comprehensive KYC in the long run will result in the provision of charged surveillance powers to future leaders who can use those powers and information as they see fit – without the user’s consent. In addition, centralized data centers are often hacked, which compromises user data and further increases attack vectors.
Mainstream narratives do not allow the disadvantages of KYC to be discussed, leaving open any regulation that could allegedly benefit society as a whole at the expense of individual rights. However, this is often not achieved and can harm the individual and his often neglected right to privacy. In a regulatory environment that is rarely discussed openly, those who value individual human rights are seen as “the screeching voice of the minority”. And since the individual is obliged to pay increasingly expensive personal costs for the supposed good of the whole, both man and the people lose.