Why Do Cryptocurrency Exchanges Require KYC Real Name Authentication?#
This article aims to explain why cryptocurrency trading platforms require real name authentication. After real name authentication, will exchanges actively sell user information? First, let's analyze a few cases.
HSBC was fined $1.9 billion for insufficient anti-money laundering measures, involving drug lords in Mexico and Colombia using its platform for money laundering. The bank also provided services to terrorist organizations and allowed blacklisted countries like North Korea and Iran to open trading accounts. Similarly, Standard Chartered was fined $132 million by the UK's Financial Conduct Authority for failing to implement adequate anti-money laundering measures, leading to criminal groups laundering $265 billion. Traditional financial institutions must strictly enforce anti-money laundering and identity verification, or face hefty fines. Holding a banking license but failing to fulfill anti-money laundering obligations will inevitably lead to penalties from regulators; this is the global operating rule: profit comes with responsibility.
Current cryptocurrency exchanges connect to the fiat currency world and may be exploited for money laundering by criminal, drug, or money laundering systems, thus they must adhere to the AML anti-money laundering framework. If they do not comply, exchanges will bear criminal liability. From the exchange's perspective, failing to implement strict KYC and phone number verification means that if an incident occurs and law enforcement requests information on criminal accounts, they will be unable to respond, leading to massive fines. Exchanges fear the funds of criminal and gambling groups, which are like flies that only bring disaster. Therefore, exchanges require all customers to undergo identity verification.
Will Cryptocurrency Exchanges Leak Identity Information?#
Exchanges typically do not actively disclose personal information, as it is not worth the risk. Cryptocurrency exchanges are essentially platforms for accumulating trust; if they are not trustworthy or secure, users will leave. Therefore, exchanges place a high value on their reputation and strive to become long-standing institutions. For example.
South Korea's largest exchange, Upbit, was investigated for failing to implement strict identity verification on 500,000 to 600,000 accounts. After the incident, regulatory and public trust in the exchange significantly declined. From their own interests, exchanges will not actively disclose customer identities to avoid reputational damage that could lead to user loss. However, just because exchanges do not actively disclose does not mean that others will not steal information.
- Local operators may monitor SMS content. If the phone number is linked to the exchange, the operator can identify the user and sell the information.
- Using malicious free VPNs poses risks. These VPNs often have backdoors, and their free nature is aimed at stealing real-time data. Once used, all transmitted data may be queried and sold.
As users in the cryptocurrency space, it is essential to prioritize cybersecurity. This explains why trading platforms require identity verification. Mainstream platforms continue to make efforts in compliance: OKX has obtained the first license in Dubai and a license in Singapore; Binance has obtained a license in Dubai; Bitget has invested in the OSL Group (which holds a Hong Kong license); Bybit has obtained licenses in Dubai and the Netherlands.
Each exchange is moving towards compliant operations. Platforms that apply for licenses in specific countries or regions are more reliable than those that only hold a U.S. MSB license (which costs only $20,000). These platform licenses cannot be purchased; they must genuinely meet local compliance requirements.
If you have not yet registered an account with OKX or Binance, it is recommended to register first——
1. OKX or Alternative Link#
- Asset Scale: $17.1 billion (slightly increased compared to 2024, reflecting market expansion)
- Number of Trading Pairs: 620 (25 new, covering more emerging coins)
- 24-Hour Trading Volume: $16.05 billion (benefiting from global user growth)
- Highlights: OKX is operated by OKEX Technology Company Limited and received early angel investment of millions from Tim Draper. This legendary investor has previously bet on Hotmail, Baidu, and Tesla, showing keen insight. By 2025, OKX will remain at the forefront of global trading platforms with services such as spot, futures, and DeFi, especially performing strongly in the Asian market.
2. Binance#
- Asset Scale: $12.85 billion (continuously growing, solidifying its leading position)
- Number of Trading Pairs: 780 (38 new, closely following market trends)
- 24-Hour Trading Volume: $19.025 billion (trading volume hitting new highs)
- Highlights: Founded by Changpeng Zhao (CZ), Binance remains a "giant" in global cryptocurrency trading in 2025. Despite facing regulatory scrutiny, Binance attracts over 150 million users with its top-notch technology and user experience. Domestic users need to register via email and use a VPN, making it still the preferred platform.
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