Speaking to Bloomberg News, CZ noted that Binance had implemented a mandatory Know Your Customer (KYC) process “for global users, for all functions” to attract new users as compliance companies. He revealed that Binance lost about 3% of its users after enforcing KYC.
Binance did not immediately respond to Cointelegraph’s confirmation request.
KYC is a common practice used by cryptocurrency exchanges and traditional financial institutions. It enables companies to verify the authenticity of users by requiring some form of real-world identification. Binance committed KYC on August 20 for all of its existing and new users to access its products and services such as deposits, trading and withdrawals of cryptocurrencies.
“We believe compliance will allow more users to take advantage of us,” said CZ, adding that most people will be more comfortable using a licensed exchange.
Binance promoted its decentralized, headquarterless structure for years until CZ announced in July that the crypto exchange was ready to work with local regulators by saying, “We want to be licensed everywhere. From now on we will become a financial institution. ”
Related: Ex-Binance Managers Say The Exchange Is Worth $ 300 Billion: Report
In its interview, CZ said that while regulators were initially skeptical of Binance, their attitudes changed over the course of the communication. “When people see me in person, they say, ‘Look, CZ is very sensible, very calm, not a madman.’ It helps build their trust a lot faster, ”he added.
Binance recently set up three subsidiaries in Ireland as part of CZ’s vision to have official headquarters in different regions of the world. “When we started we wanted to follow the principles of decentralization, no headquarters, global operations, no borders,” CZ later said, adding, “Now it’s very clear.” Of course, in order to have a centralized exchange, you need a centralized exchange operate, legal entity structure behind it. ”